Question

(IRR calculation) Determine to the nearest percent the IRR on the following projects:

a. An initial outlay of $10,000 resulting in a free cash flow of $4,000 at the end of year 1, $5,000 at the end of year 2, and $8,000 at the end of year 3

b. An initial outlay of $10,000 resulting in a free cash flow of $8,000 at the end of year 1, $5,000 at the end of year 2, and $4,000 at the end of year 3

c. An initial outlay of $10,000 resulting in a free cash flow of $4,000 at the end of years 1 through 5 and $5,000 at the end of year 6

Answer 1

	Project 1	Project 2	Project 3
IRR	27.95%	37.51%	33.54%

Working

AutoSave © of HO- Book2 - Excel Sign in File Home Insert Draw Page Layout Formulas Data Review View Help O Tell me what you want to do Share - A = = Calibri 11 BI U - - - A À - A - Insert - EX Delete Format = dan ab General E 3- $ - % 9 OSOS Conditional Format as Formatting Table Alignment Numbert Styles Paste Cell Styles Sort & Filter Clipboard Font Cells Editing A17 : X V Year - А fx в 16 17 Year 18 0 19 1 20 2 Project 1 -10000 4000 5000 8000 Project 2 -10000 8000 5000 nM Project 3 -10000 4000 4000 4000 4000 4000 5000 4000 21 22 4 23 24 6 25 26 IRR =IRR(B18:B24) EIRR(C18:C24) =IRR(D18:D24)