Question

Project L requires an initial outlay at t = 0 of $54,050, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 12%. What is the project's IRR? Round your answer to two decimal places.

Answer 1

12.31%

Step-by-step explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator

Cash flow in year 0 = $54,050

Cash flow each year from year 1 to 8 = $11,000

IRR = 12.31%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.