A company is considering a five-year project.It plans to invest $60,000 now and forecasts cash flows of $16,200 for each year.The company requires a hurdle rate of 12%.Calculate the internal rate of return to determine whether it should accept this project.Selected factors for a present value of an annuity of 1 for five years are shown below:
$$\begin{array}{cc}
\underline{\text{Interest}}&&\underline{\text{Present Value of an Annuity of 1}}\
\underline{\text{ Rate}}&&\underline{\text{ Factor}}\
10 \%&&3.7908 \
12 \%&&3.6048 \
14 \%&&3.4331
\end{array}
$$

Question

A company is considering a five-year project.It plans to invest $60,000 now and forecasts cash flows of $16,200 for each year.The company requires a hurdle rate of 12%.Calculate the internal rate of return to determine whether it should accept this project.Selected factors for a present value of an annuity of 1 for five years are shown below:
 $$\begin{array}{cc}
\underline{\text{Interest}}&&\underline{\text{Present Value of an Annuity of 1}}\
\underline{\text{ Rate}}&&\underline{\text{ Factor}}\
10 \%&&3.7908 \
12 \%&&3.6048 \
14 \%&&3.4331
\end{array}
$$

Quizplus · Accepted Answer

The Answer of A company is considering a five-year project.It plans to invest $60,000 now and forecasts cash flows of $16,200 for each year.The company requires a hurdle rate of 12%.Calculate the internal rate of return to determine whether it should accept this project.Selected factors for a present value of an annuity of 1 for five years are shown below:
 $$\begin{array}{cc}
\underline{\text{Interest}}&&\underline{\text{Present Value of an Annuity of 1}}\
\underline{\text{ Rate}}&&\underline{\text{ Factor}}\
10 \%&&3.7908 \
12 \%&&3.6048 \
14 \%&&3.4331
\end{array}
$$

A Company Is Considering a Five-Year Project