an invstment project with no residual value has a net present value of $87,980when it is discounted using a cost of capital of 10%. the annual cash flows are as follows year $ 0 2000,000 1 80,000 290,000 3 100,000 4 60,000

an invstment project with no residual value has a net present value of $87,980when it is discounted using a cost of capital of 10%. the annual cash flows are as follows year $ 0 2000,000 1 80,000 290,000 3 100,000 4 60,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

an invstment project with no residual value has a net present value of
$87,980when it is discounted using a cost of capital of 10%. the annual cash
flows are as follows
year $
0 2000,000
1 80,000
2 90,000
3 100,000
4 60,000
5 40,000
Calculate the Internal Rate of Return (IRR) of the project. (use Discount factor
20% as high level)
a.
25.7%
b.
H
17.3%
C.
11.6%
d.
16.4%

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