Given the following cash flows for a capital project calcula

Given the following cash flows for a capital project, calculate the IRR using a financial calculator

Year

0

1

2

3

4

5

Cash Flows

($50,467)

$12,746

$14,426

$21,548

$8,580

$4,959

Solution

Internal Rate of Return(IRR) is the rate at which the Net Present Value(NPV) of the project is zero

NPV = 0

=>

-50467 + 12746/(1+IRR) + 14426/(1+IRR)^2 + 21548/(1+IRR)^3 + 8580/(1+IRR)^4 + 4959/(1+IRR)^5

IRR = 8.41%

step1:

enter cash flows into cash flows register by using [CF] key

step2:

once cash flows entered press [IRR] key , screen displays default valaue

step3:

press [CPT] key , screen will display value of IRR