Question

modern refurbishing inc. is considering a project that has the following cash flow data. What is the project IRR? Note that a projects IRR can be less than the cost of capital (and even negative, In which case will it be rejected.

Year 0 1 2 3

CF -$900 $330 %315 $300 $270

A. A. 13.68, b. 14.09 c. 14.24, d. 14.75, e/ 15.16

Answer 1

Internal rate of return can be calculated using a financial calculator by inputting the below:

• Press the CF button.
• CF0= -$900. The initial cash flow is indicated by a negative sign since it is a cash outflow.  
• Cash flow for each of the fifteen years should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow cash flow, press the IRR and CPT button to get the IRR of the project.

The IRR of the project is 13.68%.

Hence, the answer is option a.