A project will generate annual cash flows of 237600 for each

A project will generate annual cash flows of $237,600 for each of the next three years, and a cash flow of $274,800 during the fourth year. The initial cost of the project is $750,600. What is the internal rate of return of this project?

9.73%

12.65%

11.02%

10.38%

11.67%

Solution

Let irr be x%
At irr,present value of inflows=present value of outflows.

750600=237600/1.0x+237600/1.0x^2+237600/1.0x^3+274800/1.0x^4

Hence x=irr=11.67%(Approx).