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Compute the IRR static for Project E. The appropriate cost of capital is 8 percent. (Do...

Compute the IRR static for Project E. The appropriate cost of capital is 8 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) What is the IRR? Should it be accepted or rejected?

    

  Project E
  Time: 0 1 2 3 4 5
  Cash flow –$1,000 $350 $480 $520 $300

$100

Solutions

Expert Solution

Solution :

The IRR Static for the project E, is 25.49 %

As per the IRR Rule,

a. In case the IRR of the project is greater than its cost of capital, the project should be accepted.

b. In case the IRR of the project is lesser than its cost of capital, the project should not be accepted.

Since, the IRR of the project E, at 25.49 %, is greater than its cost of capital at 8 % , the project should be accepted.

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago
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