A company is considering an iron ore extraction project that requires an initial investment of $1,400,000 and will yield annual cash flows of $613,228 for three years.The company's discount rate is 9%.Calculate IRR. Present value of ordinary annuity of $1:
$$\begin{array} { | r | r | r | r | r | r | r | r | }
\hline & 10 \% & 12 \% & 14 \% & 15 \% & 16 \% & 18 \% & 20 \% \
\hline 1 & 0.909 & 0.893 & 0.877 & 0.870 & 0.862 & 0.847 & 0.833 \
\hline 2 & 1.736 & 1.690 & 1.647 & 1.626 & 1.605 & 1.566 & 1.528 \
\hline 3 & 2.487 & 2.402 & 2.322 & 2.283 & 2.246 & 2.174 & 2.106 \
\hline 4 & 3.170 & 3.037 & 2.914 & 2.855 & 2.798 & 2.690 & 2.589 \
\hline
\end{array}$$

Question

A company is considering an iron ore extraction project that requires an initial investment of $1,400,000 and will yield annual cash flows of $613,228 for three years.The company's discount rate is 9%.Calculate IRR. Present value of ordinary annuity of $1:
$$\begin{array} { | r | r | r | r | r | r | r | r | } 
\hline & 10 \% & 12 \% & 14 \% & 15 \% & 16 \% & 18 \% & 20 \% \
\hline 1 & 0.909 & 0.893 & 0.877 & 0.870 & 0.862 & 0.847 & 0.833 \
\hline 2 & 1.736 & 1.690 & 1.647 & 1.626 & 1.605 & 1.566 & 1.528 \
\hline 3 & 2.487 & 2.402 & 2.322 & 2.283 & 2.246 & 2.174 & 2.106 \
\hline 4 & 3.170 & 3.037 & 2.914 & 2.855 & 2.798 & 2.690 & 2.589 \
\hline
\end{array}$$

Quizplus · Accepted Answer

IRR is between 14% and 15%.

A Company Is Considering an Iron Ore Extraction Project That