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A project will generate annual cash flows of $237,600 for each of the next three years,...

A project will generate annual cash flows of $237,600 for each of the next three years, and a cash flow of $274,800 during the fourth year. The initial cost of the project is $746,600. What is the internal rate of return of this project?

Multiple Choice

  • 10.60%

  • 11.26%

  • 9.93%

  • 11.92%

  • 12.91%

Solutions

Expert Solution

Let irr be x%
At irr,present value of inflows=present value of outflows.

746,600=237600/1.0x+237600/1.0x^2+237600/1.0x^3+274800/1.0x^4

Hence x=irr=11.92%(Approx)

jeff jeffy answered 2 years ago
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