A proposed project is expected to generate returns of $50,000 per year for each of the next four years. If the project, will cost $145,685 and taxes are ignored, what is the internal rate of the return (IRR) for the proposed project?. O 12% O 16% O 14% O Less than 10%

A proposed project is expected to generate returns of $50,000 per year for each of the next four years. If the project, will cost $145,685 and taxes are ignored, what is the internal rate of the return (IRR) for the proposed project?. O 12% O 16% O 14% O Less than 10%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 11PROB

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

A proposed project is expected to generate returns of $50,000 per year for each of the next four
years. If the project will cost $145,685 and taxes are ignored, what is the internal rate of the return
(IRR) for the proposed project?.
O 12%
O 16%
O 14%
O Less than 10%
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