Question

Project L costs $64,749.69, its expected cash inflows are $13,000 per year for 10 years, and its WACC is 14%. What is the project's IRR? Round your answer to two decimal places.

Answer 1

Ans 15.20%

Year	Project Cash Flows (i)	DF@ 12%	DF@ 12% (ii)	PV of Project ( (i) * (ii) )	DF@ 22% (iii)	PV of Project ( (i) * (iii) )
0	-64749.69	1	1	(64,749.69)	1	(64,749.69)
1	13000	1/((1+12%)^1)	0.893	11,607.14	0.820	10,655.74
2	13000	1/((1+12%)^2)	0.797	10,363.52	0.672	8,734.21
3	13000	1/((1+12%)^3)	0.712	9,253.14	0.551	7,159.19
4	13000	1/((1+12%)^4)	0.636	8,261.74	0.451	5,868.19
5	13000	1/((1+12%)^5)	0.567	7,376.55	0.370	4,809.99
6	13000	1/((1+12%)^6)	0.507	6,586.20	0.303	3,942.61
7	13000	1/((1+12%)^7)	0.452	5,880.54	0.249	3,231.65
8	13000	1/((1+12%)^8)	0.404	5,250.48	0.204	2,648.89
9	13000	1/((1+12%)^9)	0.361	4,687.93	0.167	2,171.23
10	13000	1/((1+12%)^10)	0.322	4,185.65	0.137	1,779.69
	15.20%	NPV		8,703.21	NPV	(13,748.29)
	IRR =	Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
		12% + 8703.21 / (8703.21 + 13748.29)*10%
		15.20%