Pet World is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the cost of capital (and even negative), in which case it will be rejected.
A) 2.08%
B) 2.31%
C) 2.57%
D) 2.82%
E) 3.10%

Question

Pet World is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the cost of capital (and even negative), in which case it will be rejected. 
A) 2.08% 
B) 2.31% 
C) 2.57% 
D) 2.82% 
E) 3.10%

Quizplus · Accepted Answer

Using a financial calculator or Excel, the IRR of the cash flows is calculated to be 2.57%. Since the IRR is higher than the cost of capital, the project should be accepted.

Pet World Is Considering a Project That Has the Following