The future cash flows of a stand-alone capital project follow: $\begin{array}{lllll}
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flow } & (\$ 5,000) & \$ 2,000 & \$ 2,000 & \$ 2,000
\end{array}$ With the project's approximate IRR?

Question

Quizplus · Accepted Answer

The IRR is the discount rate that makes the NPV of cash flows equal to zero. By trial and error or using financial calculators, the IRR for these cash flows is approximately 10%.

The Future Cash Flows of a Stand-Alone Capital Project Follow Year 0123 Cash flow ($5,000)$2,000$2,000$2,000\begin{array}{lllll}\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flow } & (\$ 5,000) & \$ 2,000 & \$ 2,000 & \$ 2,000\end{array} Year Cash flow ​0($5,000)​1$2,000​2$2,000​3$2,000​

The Future Cash Flows of a Stand-Alone Capital Project Follow $\begin{array}{lllll}\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flow } & (\$ 5,000) & \$ 2,000 & \$ 2,000 & \$ 2,000\end{array}$