Question

Project L requires an initial outlay at t = 0 of $75,104, its expected cash inflows are $13,000 per year for 11 years, and its WACC is 10%. What is the project's IRR? Round your answer to two decimal places.

Answer 1

Ans 12.63%

Year	Project Cash Flows (i)	DF@ 10%	DF@ 10% (ii)	PV of Project ( (i) * (ii) )	DF@ 20% (iii)	PV of Project ( (i) * (iii) )
0	-75104	1	1	(75,104.00)	1	(75,104.00)
1	13000	1/((1+10%)^1)	0.909	11,818.18	0.833	10,833.33
2	13000	1/((1+10%)^2)	0.826	10,743.80	0.694	9,027.78
3	13000	1/((1+10%)^3)	0.751	9,767.09	0.579	7,523.15
4	13000	1/((1+10%)^4)	0.683	8,879.17	0.482	6,269.29
5	13000	1/((1+10%)^5)	0.621	8,071.98	0.402	5,224.41
6	13000	1/((1+10%)^6)	0.564	7,338.16	0.335	4,353.67
7	13000	1/((1+10%)^7)	0.513	6,671.06	0.279	3,628.06
8	13000	1/((1+10%)^8)	0.467	6,064.60	0.233	3,023.38
9	13000	1/((1+10%)^9)	0.424	5,513.27	0.194	2,519.49
10	13000	1/((1+10%)^10)	0.386	5,012.06	0.162	2,099.57
11	13000	1/((1+10%)^11)	0.350	4,556.42	0.135	1,749.64
		PV		9,331.79	NPV	(18,852.22)
	IRR =	Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
		10% + 9331.79 / (9331.79 + 18852.22)*10%
		12.63%