Use the information for the question(s)below.
The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some
new machinery costing $450 000. The Sisyphean Company expects cash inflows from this project as
detailed below:
The appropriate discount rate for this project is 16%.
-The internal rate of return (IRR)for this project is closest to:
A)39.1%
B)34.1%
C)18.9%
D)22.7%

Question

Use the information for the question(s)below.
The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some
new machinery costing $450 000. The Sisyphean Company expects cash inflows from this project as
detailed below:
  The appropriate discount rate for this project is 16%.
-The internal rate of return (IRR)for this project is closest to:
A)39.1% 
B)34.1% 
C)18.9% 
D)22.7%

Quizplus · Accepted Answer

To find the IRR, we need to find the discount rate at which the net present value (NPV) of the cash inflows equals the initial investment of $450 000. Using trial and error or a financial calculator or spreadsheet, we get an IRR of approximately 34.1%. Therefore, B is the correct choice.

Use the Information for the Question(s)below