Question
In: Finance
1. A project has a total up-front cost of $435.44. The cash flows are $100 in...
1. A project has a total up-front cost of $435.44. The cash flows are $100 in the first year, $200 in the second year, and $300 in the third year. What’s the IRR? If we require an 18 percent return, should we take this investment?
Solutions
Expert Solution
Solution :
The IRR of the investment is = 15.00 % .
As per the IRR Rule,
a. In case the IRR of the investment is greater than its required rate of return, the investment should be accepted.
b. In case the IRR of the investment is lesser than its required rate of return, the investment should not be accepted.
Since, the IRR of the investment at 15 %, is lesser than its required rate of return at 18 %, the investment should not be accepted.
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
jeff jeffy answered 2 years agoRelated Solutions
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