Project L costs $47,974.56, its expected cash inflows are $10,000 per year for 10 years, and...

Project L costs $47,974.56, its expected cash inflows are $10,000 per year for 10 years, and its WACC is 10%. What is the project's IRR? Round your answer to two decimal places.

Expert Solution

Ans 16.21%

Year	Project Cash Flows (i)		DF@ 10% (ii)	PV of Project A ( (i) * (ii) )	DF@ 20% (ii)	PV of Project A ( (i) * (ii) )
0	-47974.56		1	(47,974.56)	1	(47,974.56)
1	10000		0.909	9,090.91	0.833	8,333.33
2	10000		0.826	8,264.46	0.694	6,944.44
3	10000		0.751	7,513.15	0.579	5,787.04
4	10000		0.683	6,830.13	0.482	4,822.53
5	10000		0.621	6,209.21	0.402	4,018.78
6	10000		0.564	5,644.74	0.335	3,348.98
7	10000		0.513	5,131.58	0.279	2,790.82
8	10000		0.467	4,665.07	0.233	2,325.68
9	10000		0.424	4,240.98	0.194	1,938.07
10	10000		0.386	3,855.43	0.162	1,615.06
		NPV		13,471.11	NPV	(6,049.84)



	IRR =	Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
		10% + 13471.11 / (13471.11 + 6049.84 )*10%
		16.21%

jeff jeffy answered 11 months ago

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