Answered: Suppose a project costs $2,200 and…

Suppose a project costs $2,200 and produces cash flows of $640, $800 and $1,900 in each of the first three years, respectively. What is the IRR of the project?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Suppose a project costs $2,200 and produces cash flows of $640, $800 and $1,900 in each of the first
three years, respectively. What is the IRR of the pioject?
O 17.27%
O 50.61%
O 28.79%
O 19.72%
O 17.91%

Expert Solution

Step 1

IRR can be calculated by following function in excel

=IRR(values,[guess])

Values = Cash flows

Guess = number close to the expected internal rate of return

Step by step

Solved in 3 steps with 1 images

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