Question

Project L requires an initial outlay at t = 0 of $84,336, its expected cash inflows are $14,000 per year for 10 years, and its WACC is 9%. What is the project's IRR? Round your answer to two decimal places. %

Answer 1

Ans 10.46%

Year	Project Cash Flows (i)	DF@ 9%	DF@ 9% (ii)	PV of Project ( (i) * (ii) )	DF@ 19% (iii)	PV of Project ( (i) * (iii) )
0	-84336	1	1	(84,336.00)	1	(84,336.00)
1	14000	1/((1+9%)^1)	0.917	12,844.04	0.840	11,764.71
2	14000	1/((1+9%)^2)	0.842	11,783.52	0.706	9,886.31
3	14000	1/((1+9%)^3)	0.772	10,810.57	0.593	8,307.82
4	14000	1/((1+9%)^4)	0.708	9,917.95	0.499	6,981.36
5	14000	1/((1+9%)^5)	0.650	9,099.04	0.419	5,866.69
6	14000	1/((1+9%)^6)	0.596	8,347.74	0.352	4,929.99
7	14000	1/((1+9%)^7)	0.547	7,658.48	0.296	4,142.85
8	14000	1/((1+9%)^8)	0.502	7,026.13	0.249	3,481.39
9	14000	1/((1+9%)^9)	0.460	6,445.99	0.209	2,925.54
10	14000	1/((1+9%)^10)	0.422	5,913.75	0.176	2,458.43
		NPV		5,511.21	NPV	(23,590.91)
	IRR =	Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
		9% + 5511.21 / (5511.21+23590.91)*10%
		10.46%