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If you invest 3000 today and expect to profit $200 a year for 10 years what...

If you invest 3000 today and expect to profit $200 a year for 10 years what id the IRR on the investment?

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Expert Solution

Project
IRR is the rate at which NPV =0
IRR -0.067657639
Year 0 1 2 3 4 5 6 7 8 9 10
Cash flow stream -3000 200 200 200 200 200 200 200 200 200 200
Discounting factor 1 0.932342 0.869262 0.81045 0.7556169 0.704494 0.656829 0.61239 0.570957 0.532327 0.496311
Discounted cash flows project -3000 214.5135 230.0802 246.7765 264.68439 283.8918 304.4931 326.5894 350.2891 375.7087 402.9729
NPV = Sum of discounted cash flows
NPV Project = -0.00043689
Where
Discounting factor = (1 + IRR)^(Corresponding period in years)
Discounted Cashflow= Cash flow stream/discounting factor
IRR= -6.77%

jeff jeffy answered 2 months ago
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