Chapter 26, Problem 14E

To determine

(1).

To calculate:

Net present value of the project.

(2).

To determine

To calculate:

Internal rate of return of the project C2.

Introduction:

Internal rate of return (IRR) refers to the interest rate at which net present value of a project will be zero. In other words we can say that a discounting rate at which present value of future cash inflows become equal to initial investment, is known as internal rate of return.