A project with an initial cost of 76940 is expected to gener

A project with an initial cost of $76,940 is expected to generate annual cash flows of $18,120 for the next 8 years. What is the project\'s internal rate of return?

15.04%

16.71%

15.87%

18.10%

18.57%

IRR is the rate of return that makes NPV eqaul to zero

NPV = Annuity * [ 1 - 1 / ( 1 + R)ⁿ] / R - Initial Invetsment

NPV = 18,120 * [ 1 - 1 / ( 1 + R)⁸] / R - 76,940

Let\'s try values for R from the options, Let\'s try 16.71%

NPV = 18,120 * [ 1 - 1 / ( 1 + 0.1671)⁸] / 0.1671 - 76,940

NPV = 0

Therefore IRR is 16.71%

$A project with an initial cost of $76,940 is expected to generate annual cash flows of $18,120 for the next 8 years. What is the project\'s internal rate of ret$

A project with an initial cost of 76940 is expected to gener

Solution

Get Help Now

Submit a Take Down Notice