What is the IRR for the following project if its initial after-tax cost is $5,000,000 and...
What is the IRR for the following project if its initial after-tax cost is $5,000,000 and it is expected to provide an after-tax operating cash outflow of ($1,800,000) in year 1, followed by inflows of $2,900,000 in year 2, $2,700,000 in year 3, and $2,300,000 in year 4?
A) 5.83% B) 31.53% C) 11.44% D) 9.67%
Homework Answers
Calculating IRR using EXCEL FUNCTION:-
| Column-A | Column-B | |
| Row-1 | Year | Cash Flows of Project ($ ) |
| Row-2 | 0 | (5,000,000.00) |
| Row-3 | 1 | (1,800,000.00) |
| Row-4 | 2 | 2,900,000.00 |
| Row-5 | 3 | 2,700,000.00 |
| Row-6 | 4 | 2,300,000.00 |
| 5.83% | ||
| #=IRR(C2:C6) |
So, IRR is 5.83%
Option A
Add Answer to:
What is the IRR for the following project if its initial
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When might the IRR rule provide different guidance regarding
project selection than the NPV rule?
a) When a project has net expenditures (costs) that occur after
positive cash inflows.
b) When a project has two or more years of initial net
expenditures, followed only by cash inflows.
c) When a project has multiple IRRs.
d) When deciding between
mutually exclusive projects with different initial investment
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