Question

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,100 1 11,100 2 14,100 3 10,100 If the required return is 15 percent, what is the IRR for this project?

Answer 1

15%

Step-by-step explanation:

The computation of the internal rate of return is shown below:

Given that

Year Cash Flow

0 -$27,100

1 $11,100

2 $14,100

3 $10,100

The formula to compute IRR is

= IRR()

After applying the above formula, the internal rate of return is 15%