Find the IRR for the following project: Outflow is $200,000; required rate of return is 18%; inflows are $50,000, $70,000, $80,000, and $100,000 respectively at the end of each year for the next four years.

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. To find the IRR, one would typically use financial calculators or software because it involves solving for the rate in the NPV equation, which cannot be easily done by hand due to its complexity. The given cash flows are an initial outflow of $200,000, followed by inflows of $50,000, $70,000, $80,000, and $100,000 over the next four years. The IRR that equates the present value of these inflows to the initial outflow is approximately 16.4%, assuming the calculation was done using an IRR financial function or software.

Find the IRR for the Following Project: Outflow Is $200,000;