As the capital budgeting director for Chapel Hill Coffins Inc.,you are evaluating construction of a new plant.The plant has a net cost of $5 million in Year 0 (today),and it will provide net cash inflows of $1 million at the end of Year 1,$1.5 million at the end of Year 2,and $2 million at the end of Years 3 through 5.Within what range is the plant's IRR?

Question

Quizplus · Accepted Answer

Using a financial calculator:IRR = CF0 = -5,000,000, C01 = 1,000,000, F01 = 1, C02 = 1,500,000 F02 = 1, C03 = 2,000,000,
F03 = 3, IRR CPT = 18.37%

As the Capital Budgeting Director for Chapel Hill Coffins Inc