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Warr Company is considering a project that has the following cash flow data. What is the...

Warr Company is considering a project that has the following cash flow data. What is the project's IRR? Year 0 1 2 3 4 Cash flows -$1,415 $400 $400 $400 $400

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Ans 5.10%

Year Project Cash Flows (i) DF@ 5% DF@ 5% (ii) PV of Project ( (i) * (ii) ) DF@ 10% (iii) PV of Project ( (i) * (iii) )
0 -1415 1 1                             (1,415.00) 1               (1,415.00)
1 400 1/((1+5%)^1) 0.952381                                   380.95 0.909                     363.64
2 400 1/((1+5%)^2) 0.907029                                   362.81 0.826                     330.58
3 400 1/((1+5%)^3) 0.863838                                   345.54 0.751                     300.53
4 400 1/((1+5%)^4) 0.822702                                   329.08 0.683                     273.21
NPV                                       3.38 NPV                   (147.05)
IRR = Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
5% + 3.38 / (3.38 + 147.05 )*5%
5.10%

jeff jeffy answered 1 year ago
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