Question

In: Finance

An investment requires an initial cash outflow of $5,100, and it will bring in cash inflows...

An investment requires an initial cash outflow of $5,100, and it will bring in cash inflows of $2,700, $1,500, $2,600, $2,700, for the next four years, respectively. What is the internal rate of return (IRR) of this project? (Format answer to percent and rounded to two decimals, enter your answers without %, for example, for answer 0.1243, enter 12.43 only)

Solutions

Expert Solution

The IRR is the interest rate that makes the NPV of the project equal to zero. So, the equation that defines the IRR for this project is:

0 = -$5,100 + $2,700/(1 + IRR) + $1,500/(1 + IRR)^2 + $2,600/(1 + IRR)^3 + $2,700/(1 + IRR)^4

IRR = 29.92%

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

25. A project requires an initial cash outflow of $5,100, and it will bring in cash...
25. A project requires an initial cash outflow of $5,100, and it will bring in cash inflows of $1,500, $2,100, $1,700, $1,800, for the next four years, respectively. What is this project's the profitability index (PI), given a discount rate of 15%? (Round answers to two decimals ,for example, for answer 0.8187, enter 0.82 only) 24. A project offers the following cash flows. Please calculate payback period of this project, assuming cash flow occurs evenly through out the year. (Round...
A project requires an initial cash outflow of $5,400, and it will bring in cash inflows...
A project requires an initial cash outflow of $5,400, and it will bring in cash inflows of $2,600, $2,500, $2,900, $1,400, for the next four years, respectively. What is the net present value of these cash flows, given a discount rate of 10%? (Round answers to two decimals, enter answer without $ or "," , such as 1234.78)
Kiewitt is considering a project opportunity that requires a lump sum of initial investment (cash outflow)...
Kiewitt is considering a project opportunity that requires a lump sum of initial investment (cash outflow) of $604.02 today. This project is expected to generate cash inflows of $150 in year 1, $Y in year 2 (due to uncertainty), $250 in year 3 and $300 in year 4. If Kiewitt requires 11% annual return for this project, what would be the minimum expected cash flow in year 2 (what is Y)? A. $88.65 B. $109 C. $200 D. $275 E....
A project has an initial cash outflow of $8,940 and produces cash inflows of $3,007, $3,392,...
A project has an initial cash outflow of $8,940 and produces cash inflows of $3,007, $3,392, and $3,993 for Years 1 through 3, respectively. What is the NPV at a discount rate of 13.9 percent? Do not round intermediate calculations and round your answer to the nearest cent.
An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next...
An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next four years, respectively. The discount rate is 15 percent.    What is the discounted payback period for these cash flows if the initial cost is $5,000? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      Discounted payback period years    What is the discounted payback period for these cash flows if the initial cost is $7,100? (Do...
An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next...
An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 11 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200? How would I do this with the calculator?
Suppose a project requires an initial cash outflow of $34,900. The project will last for four...
Suppose a project requires an initial cash outflow of $34,900. The project will last for four years with the annual cash flows given below. The required rate of return is 12%. (1) Compute the net present value of the project. Should the firm invest in this project based on net present value? Why? Year Cash Flows 1 $12,500 2 $19,700 3 0 4 $10,400 (2) Compute the internal rate of return. Should the firm invest in this project based on...
#1 Suppose a project requires an initial cash outflow of $34,900. The project will last for...
#1 Suppose a project requires an initial cash outflow of $34,900. The project will last for four years with the annual cash flows given below. The required rate of return is 12%. Year Cash Flows 1 $12,500 2 $19,700 3 0 4 &10,400 A)Compute the net present value of the project. Should the firm invest in this project based on net present value? Why? B)Compute the internal rate of return. Should the firm invest in this project based on internal...
Suppose a project requires an initial cash outflow of $34,900. The project will last for four...
Suppose a project requires an initial cash outflow of $34,900. The project will last for four years with the annual cash flows given below. The required rate of return is 12%. Year Cash Flow 1 12,500 2 19,700 3 0 4 10,400 A) Compute the net present value of the project. Should the firm invest in this project based on net present value? Why? B) Compute the internal rate of return. Should the firm invest in this project based on...
A project with an initial investment of $46,000 and cash inflows of $11,000 a year for...
A project with an initial investment of $46,000 and cash inflows of $11,000 a year for six years, calculate NPV given a required return of 12%/year. Select one: a. $888 b. -$347 c. -$1,205 d. -$775 e. $1,699
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT