Question
In: Finance
Filter Corp. has a project available with the following cash flows: Year Cash Flow 0 −$14,000...
Filter Corp. has a project available with the following cash flows:
Year Cash Flow 0 −$14,000 1 6,200 2 7,500 3 4,900 4 4,500 What is the project's IRR?
Solutions
Expert Solution
| Calculation of Projects IRR | |||||
| Year | Cashflows | Discounting factor for 25.48% | Present value@8% | Discounting factor for 30% | Present value@30% |
| 0 | -14000 | 1 | -14000 | 1 | -14000 |
| 1 | 6200 | 0.796939751 | 4,941.03 | 0.769230769 | 4,769.23 |
| 2 | 7500 | 0.635112967 | 4,763.35 | 0.591715976 | 4,437.87 |
| 3 | 4900 | 0.50614677 | 2,480.12 | 0.455166136 | 2,230.31 |
| 4 | 4500 | 0.403368481 | 1,815.16 | 0.350127797 | 1,575.58 |
| NPV | - | -987.01 | |||
| IRR | 25.48% | ||||
| IRR Explaination:- | |||||
| Internal rate of return is the rate where NPV of the project is zero. To calculate IRR, we should set NPV is equal to zero and solve for discount rate which is the IRR. | |||||
| Using trial and error method we guessed the discounting rate to be 25.48% . |
jeff jeffy answered 1 year agoRelated Solutions
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0
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Year
Cash Flow
0
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13,140
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Blinding Light Co. has a project available with the following cash flows: Year Cash Flow 0...
Blinding Light Co. has
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Year
Cash Flow
0
−$32,830
1
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2
10,130
3
14,540
4
16,170
5
11,180
What is the project's IRR?
Multiple Choice
23.32%
24.25%
20.15%
24.87%
22.39%
Living Colour Co. has a project available with the following cash flows: Year Cash Flow 0...
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Year
Cash Flow
0
−$34,110
1
8,150
2
9,810
3
13,980
4
15,850
5
10,700
If the required return for the project is 8.5 percent, what is
the project's NPV?
Blinding Light Co. has a project available with the following cash flows: Year Cash Flow 0...
Blinding Light Co. has a project available with the following
cash flows:
Year
Cash Flow
0
−$35,390
1
7,910
2
9,490
3
13,420
4
15,530
5
10,220
What is the project's IRR?
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Living Colour Co. has a project available with the following
cash flows: Year Cash Flow 0 −$32,510 1 8,450 2 10,210 3 14,680 4
16,250 5 11,300 If the required return for the project is 9.5
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$15,296.43
$14,499.75
$6,206.31
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Your company has a project available with the following cash flows: Year Cash Flow 0 −$81,100...
Your company has a project available with the following cash
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RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0...
RAK Corp. is evaluating a
project with the following cash flows:
Year
Cash Flow
0
–$
28,600
1
10,800
2
13,500
3
15,400
4
12,500
5
–
9,000
The company uses a discount rate
of 13 percent and a reinvestment rate of 6 percent on all of its
projects.
Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)...
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MIRR Discounting approach % Reinvestment approach % Combination
approach %
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