What is the IRR for the following project if its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,300,000 in year 4?

Question

Quizplus · Accepted Answer

To calculate the IRR, we need to find the discount rate at which the present value of cash inflows equals the initial cost.

Using a financial calculator or spreadsheet software, we can input the cash flows and solve for the discount rate that results in a net present value (NPV) of zero. The IRR is this discount rate expressed as a percentage.

In this case, we get an IRR of 13.57%. Therefore, the best choice is C.

What Is the IRR for the Following Project If Its