A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,600 1 11,600 2 14,600 3 10,600 If the required return is 18 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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ewomazinoade ewomazinoade · Answer 1 · 2020-05-05T03:17:58+02:00

Answer:

16.09%

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator:

Cash flow in year 0 = –$ 27,600

Cash flow in year 1 = 11,600

Cash flow in year 2 = 14,600

Cash flow in year 3 = 10,600

IRR = 16.09%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button

I hope my answer helps you