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

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 1 year ago

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