Question

what is this project’s irr?

year 0- 1099.67

yr 1. 450

yr 2. 450

yr 3. 450

Answer 1

Solution:
	The Project IRR is    11.00%
Working Notes:
	IRR of the project is at NPV of the project becomes Zero, IRR is compare with cost of capital , to analysis of project acceptance. IRR can be computed two method 1st Excel or Financial calculator which will give exact IRR 2nd is manual formula based which will give IRR but not exact.
1st method
Excel method	A	B
1	Year	Cash Flow
2	0	-1,099.67
3	1	450.00
4	2	450.00
5	3	450.00
	IRR	11.00%
		=IRR(B2:B5)
	IRR as per excel method	(used in above cell)
	formula =IRR(B2:B5)
	IRR = 11.00%
	Where B represent the column in which cash flows is entered and 2 and 5 represent the cash flows from rows from 2nd to 5th row in column B
2nd method
	The project have equal annual cash flows
	Formula will be this
	Internal rate of returns (IRR)
	= low rate +[ (sum of PVF at low rate - Sum of PVF at IRR)/(sum of PVF at low rate - Sum of PVF at high rate )]x (Difference in rates)
	Sum of PVF at IRR = Initial outflows / annual equal inflows
		=1099.67/450
		=2.443711111
Now	we will compare this SUM of PVF at IRR in table of PVA present value ordinary annuity
	We can clearly see that in 3rd row of the table as project have 3 years of cash flow 2.44371 under 11% column . Means IRR of the project is 11%.
here	We get exact Sum of PVF at IRR in the PVA table in column of 11% in 3rd row as project life is 3 , we do not have to go further for computation of IRR , if Sum of PVF at IRR does not match exactly then we will go with the above formula of IRR.
Hence	IRR under manual method is also same 11.00%
Please feel free to ask if anything about above solution in comment section of the question.