Find the internal rate of return (IRR) of a project that costs $10,000 and brings net revenue of $8,000 each year for two consecutive years.

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Expert Solution

Initial Investment = $10,000
Annual Revenue = $8,000
Period = 2 years

Let IRR be i%

NPV = -$10,000 + $8,000 * PVA of $1 (i%, 2)
0 = -$10,000 + $8,000 * PVA of $1 (i%, 2)

Using financial calculator:
N = 2
PV = -10000
PMT = 8000
FV = 0

I = 37.98%

IRR of the project is 37.98%

jeff jeffy answered 1 year ago

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