Project L costs $67,539.42, its expected cash inflows are $14,000 per year for 10 years, and...

Project L costs $67,539.42, its expected cash inflows are $14,000 per year for 10 years, and its WACC is 9%. What is the project's IRR? Round your answer to two decimal places.

Solutions

Expert Solution

		9%		12%		15%		16%		17%
Period	Cash Flow	Discountig Factor [1/(1.09^period)]	PV of cash flows (cash flow*discounting factor)	Discountig Factor [1/(1.12^period)]	PV of cash flows (cash flow*discounting factor)	Discountig Factor [1/(1.15^period)]	PV of cash flows (cash flow*discounting factor)	Discountig Factor [1/(1.16^period)]	PV of cash flows (cash flow*discounting factor)	Discountig Factor [1/(1.17^period)]	PV of cash flows (cash flow*discounting factor)
0	-67539.42	1	-67539.42	1	-67539.42	1	-67539.42	1	-67539.42	1	-67539.42
1	14000	0.9174312	12844.0367	0.8928571	12500	0.8695652	12173.91304	0.862069	12068.966	0.8547009	11965.812
2	14000	0.84168	11783.5199	0.7971939	11160.71429	0.7561437	10586.01134	0.7431629	10404.281	0.7305136	10227.19
3	14000	0.7721835	10810.5687	0.7117802	9964.923469	0.6575162	9205.227254	0.6406577	8969.2074	0.6243706	8741.1878
4	14000	0.7084252	9917.95295	0.6355181	8897.253098	0.5717532	8004.545438	0.5522911	7732.0754	0.53365	7471.1007
5	14000	0.6499314	9099.03941	0.5674269	7943.97598	0.4971767	6960.474294	0.476113	6665.5822	0.4561112	6385.5561
6	14000	0.5962673	8347.74258	0.5066311	7092.835696	0.4323276	6052.586343	0.4104423	5746.1916	0.3898386	5457.7403
7	14000	0.5470342	7658.47943	0.4523492	6332.889015	0.375937	5263.118559	0.3538295	4953.6134	0.3331954	4664.7353
8	14000	0.5018663	7026.12792	0.4038832	5654.365192	0.3269018	4576.624834	0.3050255	4270.3564	0.2847824	3986.9532
9	14000	0.4604278	6445.98891	0.36061	5048.54035	0.2842624	3979.673769	0.262953	3681.3417	0.2434037	3407.6523
10	14000	0.4224108	5913.7513	0.3219732	4507.625312	0.2471847	3460.585886	0.2266836	3173.5704	0.2080374	2912.5234
		NPV =	22307.7878	NPV =	11563.7024	NPV =	2723.340762	NPV =	125.7647	NPV =	-2318.969

IRR is the rate of return at which NPV=0

Here, NPV@16% is positive and @17% is negative.

Therefore, IRR is between 16% and 17%

IRR = Rate at which positive NPV + [Positive NPV/(Positive NPV-Negative NPV)]

= 16% + [125.7647/(125.7647-(-2318.969)]

= 16% + [125.7647/2444.7337]

= 16% + 0.05144% = 16.05%

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Project L costs $65,458.38, its expected cash inflows are $14,000 per year for 10 years, and...

Project L costs $65,458.38, its expected cash inflows are $14,000 per year for 10 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.

Project L costs $50,000, its expected cash inflows are $14,000 per year for 12 years, and...

Project L costs $50,000, its expected cash inflows are $14,000 per year for 12 years, and its WACC is 14%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. $

Project L costs $65,000, its expected cash inflows are $14,000 per year for 8 years, and...

Project L costs $65,000, its expected cash inflows are $14,000 per year for 8 years, and its WACC is 14%. What is the project's payback? Round your answer to two decimal places.

2.Project L costs $65,978.46, its expected cash inflows are $14,000 per year for 9 years, and...

2.Project L costs $65,978.46, its expected cash inflows are $14,000 per year for 9 years, and its WACC is 12%. What is the project's IRR? Round your answer to two decimal places.

Project L costs $55,000, its expected cash inflows are $13,000 per year for 10 years, and...

Project L costs $55,000, its expected cash inflows are $13,000 per year for 10 years, and its WACC is 14%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

Project L costs $40,000, its expected cash inflows are $10,000 per year for 10 years, and...

Project L costs $40,000, its expected cash inflows are $10,000 per year for 10 years, and its WACC is 10%. What is the project's payback? Round your answer to two decimal places.

Project L costs $47,974.56, its expected cash inflows are $10,000 per year for 10 years, and...

Project L costs $47,974.56, its expected cash inflows are $10,000 per year for 10 years, and its WACC is 10%. What is the project's IRR? Round your answer to two decimal places.

PAYBACK PERIOD Project L costs $65,000, its expected cash inflows are $14,000 per year for 11...

PAYBACK PERIOD Project L costs $65,000, its expected cash inflows are $14,000 per year for 11 years, and its WACC is 9%. What is the project's payback? Round your answer to two decimal places. __ years

Project L costs $35,000, its expected cash inflows are $12,000 per year for 8 years, and...

Project L costs $35,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 12%. What is the project's MIRR? Round your answer to two decimal places. Do not round your intermediate calculations.

Project L costs $47,089.43, its expected cash inflows are $10,000 per year for 11 years, and...

Project L costs $47,089.43, its expected cash inflows are $10,000 per year for 11 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.

Subjects