Question

In: Finance

Calculate the internal rate of return on the following projects: Initial outlay of $50,000 with an...

  1. Calculate the internal rate of return on the following projects:
    1. Initial outlay of $50,000 with an after-tax cash flow of $10,000 per year for eight years.
    2. Initial outlay of $600,000 with an after-tax cash flow of $120,000 per year for ten years.
    3. Initial outlay of $25,000 with an after-tax cash flow $11,500 per year for three years.

Solutions

Expert Solution

Internal Rate of Return (IRR) is the rate at which NPV is zero. Excel function IRR can be used to find the IRR with cash flows as the input.

1. Initial outlay of $50,000 with an after-tax cash flow of $10,000 per year for eight years.

IRR = 11.8145%

2. Initial outlay of $600,000 with an after-tax cash flow of $120,000 per year for ten years.

IRR = 15.0984%

3. Initial outlay of $25,000 with an after-tax cash flow $11,500 per year for three years.

IRR = 18.0103%

Can you please upvote? Thank You :-)

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Determine the internal rate of return on the following​ project: An initial outlay of 9000 resulting...
Determine the internal rate of return on the following​ project: An initial outlay of 9000 resulting in a cash inflow of 1800 at the end of year​ 1, 4800 at the end of year 2, and 7800 at the end of year 3
The internal rate of return represents the rate of interest that recovers the initial investment outlay....
The internal rate of return represents the rate of interest that recovers the initial investment outlay. Discuss the validity of this statement. paragraph answer:
initial cash outlay is $50,000. the required rate of return is 9%. the length of time...
initial cash outlay is $50,000. the required rate of return is 9%. the length of time of the project is 6 years. each year the project is expected to provide $12,500 of free cash flow. calculate the IRR
Initial cash outlay is $50,000. The required rate of return is 9%. The length of time...
Initial cash outlay is $50,000. The required rate of return is 9%. The length of time of the project is 6 years. Each year the project is expected to provide $12,500 of free cash flow. 1a. Calculate NPV 1b. Calculate the (estimated) IRR Hint: start with (I.C.O. / F.C.F) The existing 10 year, 6% bonds are trading in the market at $900. The corporate tax rate is 32% Estimated YTM formula: YTM=Coupon+par value-market valueyearsmarket value+par value2 After-tax interest rate =...
Calculate the NPV at 9% and the IRR for the following projects: An initial outlay of...
Calculate the NPV at 9% and the IRR for the following projects: An initial outlay of $69,724 and an inflow of 15,000 followed by four consecutive inflows of $17,000
Payback Period, Net Present Value, and Internal Rate of Return An organization’s initial outlay for a...
Payback Period, Net Present Value, and Internal Rate of Return An organization’s initial outlay for a proposed project is $2,000,000. Use the table below to calculate the payback period, net present value, and internal rate of return for the project. Free Cash Flows Year Amount Year Amount 1 $0.00 6 $0.00 2 $0.00 7 $0.00 3 $1,000,000.00 8 $500,000.00 4 $50.00 9 $500,000.00 5 $750,000.00 10 $500,000.00 As the CEO of the organization, if the firm’s cost of capital is...
P10–14 Internal rate of return  For each of the projects shown in the following table, calculate the...
P10–14 Internal rate of return  For each of the projects shown in the following table, calculate the internal rate of return (IRR). Then indicate, for each project, the maximum cost of capital that the firm could have and still find the IRR acceptable. I DO NOT HAVE A FINANCIAL CALCULATOR OR I CANNOT USE EXCEL SPREADSHEETS; CAN YOU PLEASE BREAK IT DOWN ON HOW TO FIND THE IRR....THANKS IN ADVANCE Project B Project C Initial investment (CF0) −$490,000 −$20,000 Year (t)...
Billabong Tech uses the internal rate of return​ (IRR) to select projects. Calculate the IRR for...
Billabong Tech uses the internal rate of return​ (IRR) to select projects. Calculate the IRR for each of the following projects and recommend the best project based on this measure. Project​ T-Shirt requires an initial investment of ​$12,500 and generates cash inflows of ​$7,500 per year for 3 years. Project Board Shorts requires an initial investment of ​$18,333 and produces cash inflows of ​$10,000 per year for 4 years
Billabong Tech uses the internal rate of return​ (IRR) to select projects. Calculate the IRR for...
Billabong Tech uses the internal rate of return​ (IRR) to select projects. Calculate the IRR for each of the following projects and recommend the best project based on this measure. Project​ T-Shirt requires an initial investment of ​$16, 000 and generates cash inflows of ​$6,000 per year for 6 years. Project Board Shorts requires an initial investment of ​$30,667 and produces cash inflows of ​$11,000 per year for 7 years
Internal rate of return and modified internal rate of return. Quark Industries has three potential​ projects,...
Internal rate of return and modified internal rate of return. Quark Industries has three potential​ projects, all with an initial cost of ​$1,600,000. Given the discount rate and the future cash flow of each project in the following​ table,  Cash Flow   Project M Project N Project O   Year 1   $400,000   $500,000 $900,000   Year 2   ​$400,000   ​$500,000   $700,000   Year 3   $400,000 $500,000 $500,000   Year 4   $400,000 $500,000 $300,000   Year 5 $400,000   $500,000 $100,000 Discount rate 9​% 14%   17%
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT