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XYZ Inc. is considering a new project that has the following cash flow data. What is...

XYZ Inc. is considering a new project that has the following cash flow data. What is the project's IRR?

Year 0 1 2 3 4 5

Cash Flows -1043 340 340 340 340 340

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Expert Solution

Ans 18.85%

Year Project Cash Flows (i) DF@ 14% DF@ 14% (ii) PV of Project ( (i) * (ii) ) DF@ 24% (iii) PV of Project ( (i) * (iii) )
0 -1043 1 1                                   (1,043) 1                     (1,043)
1 340 1/((1+14%)^1) 0.877193                                         298 0.806                           274
2 340 1/((1+14%)^2) 0.769468                                         262 0.650                           221
3 340 1/((1+14%)^3) 0.674972                                         229 0.524                           178
4 340 1/((1+14%)^4) 0.592080                                         201 0.423                           144
5 340 1/((1+14%)^5) 0.519369                                         177 0.341                           116
NPV                                         124 NPV                         (110)
IRR = Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
14% + 124 / (124 + 110)*10%
18.85%

jeff jeffy answered 1 year ago
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