IRR Project L costs $56,993.01, its expected cash inflows are $11,000 per year for 11 years,...

IRR Project L costs $56,993.01, its expected cash inflows are $11,000 per year for 11 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places. %

Expert Solution

Ans 15.25%

Year	Project Cash Flows (i)		DF@ 10% (ii)	PV of Project A ( (i) * (ii) )	DF@ 20% (ii)	PV of Project A ( (i) * (ii) )
0	-56993		1	(56,993.00)	1	(56,993.00)
1	11000		0.909	10,000.00	0.833	9,166.67
2	11000		0.826	9,090.91	0.694	7,638.89
3	11000		0.751	8,264.46	0.579	6,365.74
4	11000		0.683	7,513.15	0.482	5,304.78
5	11000		0.621	6,830.13	0.402	4,420.65
6	11000		0.564	6,209.21	0.335	3,683.88
7	11000		0.513	5,644.74	0.279	3,069.90
8	11000		0.467	5,131.58	0.233	2,558.25
9	11000		0.424	4,665.07	0.194	2,131.87
10	11000		0.386	4,240.98	0.162	1,776.56
11	11000		0.350	3,855.43	0.135	1,480.47
		NPV		14,452.67	NPV	(9,395.34)



	IRR =	Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
		10% + 14452.67 / (14452.67 + 9395.34)*10%
		15.25%

jeff jeffy answered 1 year ago

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