Project K costs $44,887.46, its expected cash inflows are $10,000 per year for 9 years, and its...
Question:
Project K costs $44,887.46, its expected cash inflows are $10,000 per year for 9 years, and its WACC is 10%. What is the project's IRR?
Internal Rate of Return (IRR)
The internal rate of return (IRR) is the discount rate at which the present value of cash outflows and cash inflows are equal or the net present value (NPV) is zero. A higher IRR compared to the expected return means that the project would add value to the company while the reverse is true.
Answer and Explanation: 1
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View this answerIRR is 16.75%.
Compute IRR as follows: -
| Computation for IRR | ||
|---|---|---|
| Year | Particulars | Amount |
| 0 | Cash Outflow | ...|
See full answer below.
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Internal Rate of Return: Advantages & Disadvantages
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Learn about the internal rate of return. Understand what the IRR is, identify the problems with the IRR, and examine the importance of the NPV and the IRR.
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