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If a project has an initial outlay of $35,000 and cash flows of $13,000 per year...

If a project has an initial outlay of $35,000 and cash flows of $13,000 per year for the next 5 years, what is the IRR of this project? (Answer to the nearest tenth of a percent, e.g. 12.3).

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Answer #1

Let irr be x%
At irr,present value of inflows=present value of outflows.

35,000=13000/1.0x+13000/1.0x^2+13000/1.0x^3+13000/1.0x^4+13000/1.0x^5

Hence x=irr=24.9%(Approx).

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