Question

Poorman Company is contemplating a project with an initial capital investment of $40,000. The expected future annual cash inflows from the project are estimated to be $7,500 for the next 8 years.

What is the estimated internal rate of return for the project?

Answer 1

The Internal Return Rate (IRR) is 10%.

Step-by-step explanation:

The IRR is the return rate where the future cash flows of an investment equal the initial disbursement of that investment. In other words, IRR is the rate where the Present Net Value of an investment is equal to zero: Initial investment = discounted future cash flows.