Petrus Company is looking at an energy-saving investment which will cost $500,000 and will save the company $300,000 in the first year, $200,000 in the second year, and $48,000 in the third year. They have a hurdle rate of 7%, and they believe this project will have a return somewhere close to the hurdle rate. Please refer to the tables below and calculate the IRR of the investment. Choose the option that comes closest to describing the actual IRR.

Question

Petrus Company is looking at an energy-saving investment which will cost $500,000 and will save the company $300,000 in the first year, $200,000 in the second year, and $48,000 in the third year. They have a hurdle rate of 7%, and they believe this project will have a return somewhere close to the hurdle rate. Please refer to the tables below and calculate the IRR of the investment.  Choose the option that comes closest to describing the actual IRR.

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The Answer of Petrus Company is looking at an energy-saving investment which will cost $500,000 and will save the company $300,000 in the first year, $200,000 in the second year, and $48,000 in the third year. They have a hurdle rate of 7%, and they believe this project will have a return somewhere close to the hurdle rate. Please refer to the tables below and calculate the IRR of the investment.  Choose the option that comes closest to describing the actual IRR.

Petrus Company Is Looking at an Energy-Saving Investment Which Will