A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate the IRR of the project.
A) 30.25%
B) 28.28%
C) 26.22%
D) 24.25%
E) 22.25%

Question

Quizplus · Accepted Answer

The IRR is the discount rate that makes the net present value (NPV) of the cash flows equal to zero. Using trial and error or financial calculator, the IRR is approximately 26.22%.

A 25- Year Project Has a Cost of $1,500,000 and Has