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

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Quizplus · Accepted Answer

IRR is the discount rate that makes the NPV of a project equal to zero. In this case, the NPV is:-5,000,000 + (2,900,000 / (1 + IRR)^2) + (2,700,000 / (1 + IRR)^3) + (2,300,000 / (1 + IRR)^4) = 0Solving for IRR using a financial calculator or spreadsheet, we get IRR = 5.83%.

What Is the IRR for the Following Project If Its