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 ago
Next > < Previous

Related Solutions

A company. has a project available with the following cash flows: Year Cash Flow 0 −$34,310...
A company. has a project available with the following cash flows: Year Cash Flow 0 −$34,310 1 12,780 2 14,740 3 20,150 4 11,420 If the required return for the project is 8.6 percent, what is the project's NPV?
A company. has a project available with the following cash flows: Year Cash Flow 0 −$31,910...
A company. has a project available with the following cash flows: Year Cash Flow 0 −$31,910 1 13,080 2 14,740 3 20,850 4 12,020 If the required return for the project is 9.6 percent, what is the project's NPV?
A company. has a project available with the following cash flows: Year Cash Flow 0 −$31,430...
A company. has a project available with the following cash flows: Year Cash Flow 0 −$31,430 1 13,140 2 14,740 3 20,990 4 12,140 If the required return for the project is 9.8 percent, what is the project's NPV? $8,619.88 $29,580.00 $15,557.89 $19,396.85 $16,972.24
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 −$32,830 1 8,390 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...
Living Colour Co. has a project available with the following cash flows: 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?
Living Colour Co. has a project available with the following cash flows: Year Cash Flow 0...
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 percent, what is the project's NPV? $28,380.00 $15,296.43 $14,499.75 $6,206.31 $13,384.38
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 flows: Year Cash Flow 0 −$81,100 1 21,500 2 25,000 3 30,800 4 26,000 5 19,800 If the required return is 14 percent, should the project be accepted based on the IRR?
RAK Corp. is evaluating a project with the following cash flows:    Year Cash Flow 0...
RAK Corp. is evaluating a project with the following cash flows:    Year Cash Flow 0 –$ 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.)...
Mittuch Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$...
Mittuch Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 15,400 1 6,500 2 7,700 3 7,300 4 6,100 5 –3,500 The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project using all three methods. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR Discounting approach % Reinvestment approach % Combination approach %
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT