Question

In: Finance

What is the IRR of the following set of cash flows?     Year Cash Flow 0...

What is the IRR of the following set of cash flows?

   

Year Cash Flow
0 –$11,768            
1 6,500            
2 5,400            
3 6,200            

24.09%

25.36%

26.63%

25.87%

24.85%

Solutions

Expert Solution

IRR is 25.36% as shown below
Statement showing Cash flows
Particulars Time PVf 25% Amount PV
Cash Outflows                              -                          1.00               (11,768.00)            (11,768.00)
PV of Cash outflows = PVCO            (11,768.00)
Cash inflows                         1.00                    0.8000                    6,500.00                5,200.00
Cash inflows                         2.00                    0.6400                    5,400.00                3,456.00
Cash inflows                         3.00                    0.5120                    6,200.00                3,174.40
PV of Cash Inflows =PVCI              11,830.40
NPV= PVCI - PVCO                      62.40
Statement showing Cash flows
Particulars Time PVf 26% Amount PV
Cash Outflows                              -                          1.00               (11,768.00)            (11,768.00)
PV of Cash outflows = PVCO            (11,768.00)
Cash inflows                         1.00                    0.7937                    6,500.00                5,158.73
Cash inflows                         2.00                    0.6299                    5,400.00                3,401.36
Cash inflows                         3.00                    0.4999                    6,200.00                3,099.42
PV of Cash Inflows =PVCI              11,659.51
NPV= PVCI - PVCO                  (108.49)
NPV at 25%                       62.40
NPV at 26%                  (108.49)
Difference at 1%= 62.40 - (108.49)                     170.89
IRR = 25% + 62.40/170.89*1%
IRR = 25.36%

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

What is the IRR of the following set of cash flows?    Year Cash Flow 0...
What is the IRR of the following set of cash flows?    Year Cash Flow 0 –$11,280             1 6,200             2 4,200             3 6,100             Multiple Choice 21.46% 21.9% 22.34% 20.8% 23%
What is the IRR of the following set of cash flows? Year 0 Cash Flow –$10,741...
What is the IRR of the following set of cash flows? Year 0 Cash Flow –$10,741 Year 1 Cash Flow $5,900 Year 2 Cash Flow $4,300 Year 3 Cash Flow $6,100
What is the payback period for the following set of cash flows? Year   Cash Flow 0...
What is the payback period for the following set of cash flows? Year   Cash Flow 0 -5,360 1 1,591 2 1,572 3   1,531 4     1,800
What is the payback period for the following set of cash flows? Year Cash Flow 0...
What is the payback period for the following set of cash flows? Year Cash Flow 0 −$ 3,900 1 1,000 2 2,000 3 1,100 4 2,900 Multiple Choice 3.12 years 2.82 years 2.77 years 2.84 years 2.96 years
What is the payback period for the following set of cash flows? Year      Cash Flow 0          ...
What is the payback period for the following set of cash flows? Year      Cash Flow 0           -$6,400 1             1,600 2             1,900 3             2,300 4             1,400 A. 3.38 years B. 3.45 years C. 3.60 years D. 3.43 years E. 3.73 years
For the following set of cash flows, Year Cash Flow 0 –$8,700 Year1 Cash Flow $5,600...
For the following set of cash flows, Year Cash Flow 0 –$8,700 Year1 Cash Flow $5,600 Year 2 Cash Flow $6,100 Year 3 Cash Flow $4,300 a. What is the NPV at a discount rate of 0 percent? b. What is the NPV at a discount rate of 12 percent? c. What is the NPV at a discount rate of 24 percent? d. What is the NPV at a discount rate of 29 percent?
For the following set of cash flows,    Year Cash Flow 0 –$7,600            1 4,700...
For the following set of cash flows,    Year Cash Flow 0 –$7,600            1 4,700            2 3,300            3 5,000               a. What is the NPV at a discount rate of 0 percent?    b. What is the NPV at a discount rate of 11 percent?    c. What is the NPV at a discount rate of 22 percent? d. What is the NPV at a discount rate of 27 percent?
For the following set of cash flows,    Year Cash Flow 0 –$7,100            1 6,900...
For the following set of cash flows,    Year Cash Flow 0 –$7,100            1 6,900            2 3,600            3 4,200               Required: (a) What is the NPV at a discount rate of 0 percent? (Click to select)  $7,980  $7,600.00  $7,372  $7,828  $7,220    (b) What is the NPV at a discount rate of 10 percent? (Click to select)  $5,462.56  $5,144.35  $5,568.63  $5,038.28  $5,303.46    (c) What is the NPV at a discount rate of 23 percent? (Click to select)  $3,240.69  $3,146.3  $2,988.99  $3,303.62  $3,078.59 (d) What is the NPV at a discount...
For the following set of cash flows,    Year Cash Flow 0 –$6,100            1 5,400...
For the following set of cash flows,    Year Cash Flow 0 –$6,100            1 5,400            2 5,600            3 3,300               Required: (a) What is the NPV at a discount rate of 0 percent? (b) What is the NPV at a discount rate of 14 percent? (c) What is the NPV at a discount rate of 18 percent? (d) What is the NPV at a discount rate of 23 percent?
What is the payback period for the following set of cash flows?     Year Cash Flow...
What is the payback period for the following set of cash flows?     Year Cash Flow 0 −$ 4,200        1 2,500        2 2,600        3 2,600        4 1,900       
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT