A project has the following cash flows.What is the internal rate of return? $$\begin{array} { | c | r | }
\hline \text { Year } & \text { Cash Flow } \
\hline 0 & - \$ 33,800 \
\hline 1 & 12,360 \
\hline 2 & 14,680 \
\hline 3 & 16,710 \
\hline
\end{array}$$
A)13.23 percent
B)13.58 percent
C)12.96percent
D)13.67 percent
E)13.10 percent

Question

A project has the following cash flows.What is the internal rate of return? $$\begin{array} { | c | r | } 
\hline \text { Year } & \text { Cash Flow } \
\hline 0 & - \$ 33,800 \
\hline 1 & 12,360 \
\hline 2 & 14,680 \
\hline 3 & 16,710 \
\hline
\end{array}$$
A)13.23 percent
B)13.58 percent
C)12.96percent
D)13.67 percent
E)13.10 percent

Quizplus · Accepted Answer

The internal rate of return is the discount rate that makes the net present value of a project equal to zero. In this case, the net present value is:-33,800 + 12,360/(1+r) + 14,680/(1+r)^2 + 16,710/(1+r)^3 = 0Solving for r using a financial calculator gives r = 13.23%.

A Project Has the Following Cash Flows A)1323 Percent B)13

A Project Has the Following Cash Flows A)1323 Percent
B)13