Question

A project with an initial cost of $77,600 is expected to generate annual cash flows of $17,680 for the next 8 years. What is the project's internal rate of return

Answer 1

Internal rate of return = 15.68% (Approx)

Step-by-step explanation:

Given:

Initial cost = $77,600

Annual cash flows = $17,680

Number of year = 8 year

Find:

Internal rate of return

Computation:

77,600 = 17,680/(1+x)¹+17,680/(1+x)²+17,680/(1+x)³+17,680/(1+x)⁴+17,680/(1+x)⁵+17,680/(1+x)⁶+17,680/(1+x)⁷+17,680/(1+x)⁸

Internal rate of return = 15.68% (Approx)