Datta Computer Systems is considering a project that has the following cash flow data.What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative),in which case it will be rejected.
A)9.70%
B)10.78%
C)11.98%
D)13.31%
E)14.64%

Question

Datta Computer Systems is considering a project that has the following cash flow data.What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative),in which case it will be rejected. 
A)9.70% 
B)10.78% 
C)11.98% 
D)13.31% 
E)14.64%

Quizplus · Accepted Answer

To calculate the IRR, we need to find the discount rate that equates the present value of the cash inflows to the initial outflow. Using trial and error or a financial calculator, we find that the IRR is approximately 13.31%. Since the IRR is higher than the WACC, this project should be accepted.

Datta Computer Systems Is Considering a Project That Has the Following