A project with an initial cost of $51,400 is expected to generate annual cash flows of $16,910 for the next 5 years. What is the project's internal rate of return

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ewomazinoade ewomazinoade · Answer 1 · 2020-08-22T02:34:08+02:00

Answer:

19.27%

Explanation:

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator

Cash flow in year 0 = $-51,400

Cash flow each year from year 1 to 5 = $16,910

IRR = 19.27%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.