229k views
5 votes
Chronic Pain Clinic has estimated the following cash flows associated with a new project. The project cost of capital (discount rate) is 10 percent. Year Expected Net Cash Flow 0 ($800,000) 1 400,000 2 400,000 3 400,000 What is the project’s IRR? A. 18.5 percent B. 19.9 percent C. 20.4 percent D. 21.8 percent E. 23.4 percent

1 Answer

4 votes

Answer:

E. 23.4 percent

Step-by-step explanation:

The computation of the internal rate of return is shown below

Given that

The project cost of capital is 10%

And, the year and net cash flow is

Year Expected Net Cash Flow

0 ($800,000)

1 400,000

2 400,000

3 400,000

Now we apply the following formula

= IRR()

So the internal rate of return is 23.38% i.e. 23.4%

User Sabrina Leggett
by
8.1k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories