Question

Project L requires an initial outlay at t = 0 of $83,559, its expected cash inflows are $14,000 per year for 9 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.

%

Project L requires an initial outlay at t = 0 of $59,000, its expected cash inflows are $15,000 per year for 6 years, and its WACC is 12%. What is the project's payback? Round your answer to two decimal places.

years

Answer 1

1)	Project's IRR		9.11%
Working:
	Project's IRR is the rate at which net present value of project is zero.
	Year		Cash Flow
	0		$        -83,559
	1		14,000
	2		14,000
	3		14,000
	4		14,000
	5		14,000
	6		14,000
	7		14,000
	8		14,000
	9		14,000
	IRR	=	=irr(D8:D17)
		=	9.11%
2)	Project's payback		3.93 Years
Working:
	Project's payback is the time upto which cost of project is recovered back.
	Project's payback	=	Cost of project	/	Annual cash flow
		=	$         59,000	/	$         15,000
		=	3.93