Register
If a project's IRR is 13% and the project provides annual cash flows of $15,000 for 4 years, how much did the project cost? a. $44,617 b. $52,200 d. $60,000 d. $72,747
173k views
0 votes
If a project's IRR is 13% and the project provides annual cash flows of $15,000 for 4 years, how much did the project cost?

a. $44,617
b. $52,200
d. $60,000
d. $72,747

User Daniel Becker
by
4.8k points

1 Answer

2 votes

Answer: a. $44,617

Step-by-step explanation:

The Internal Rate of Return brings the NPV of a project to zero which means that the cost of the project will be the Net present value of the cash inflows using the IRR as the discount rate.

This is a constant payment so can be treated as an annuity.

Present value of annuity = Annuity * Present value interest factor of annuity, 4 years , 13%

= 15,000 * 2.9745

= 44,617.5

= $44,617 approx

If a project's IRR is 13% and the project provides annual cash flows of $15,000 for-example-1
User Gaurav Mehta
by
5.0k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.2m questions

6.8m answers

Other Questions

Decker Tires' free cash flow was just FCF0 = $1.32. Analysts expect the company's free cash flow to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The WACC
Misk Co. purchased the following securities during 20X7 to be classified as held-to-maturity securities, trading securities, or available-for-sale securities: I. Debt securities bought and held for the
Risa has to work long hours and sometimes weekends, losing out on family time. Risa doesn't find her long hours overly stressful, but rather she sees it as her contribution to maintaining her family's
Which of the following should be considered last when searching for financing? Family members Banks Commercial finance companies Credit cards I'm guessing it's C but idk
Explain the similarities and differences between how both producers and consumer use money
Link Copied!