Your company has a project available with the following cash flows: Year 912345 Cash Flow -$ 81,100 21,500 25,000 30,800 26,000 19,800 If the required return is 14 percent, should the project be accepted based on the IRR?

Your company has a project available with the following cash flows: Year 912345 Cash Flow -$ 81,100 21,500 25,000 30,800 26,000 19,800 If the required return is 14 percent, should the project be accepted based on the IRR?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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Question

Your company has a project available with the following cash flows : If the required return is 14 percent should the project be accepted based on IRR?

Your company has a project available with the following cash flows:
Year
1
2
3
4
5
Cash Flow
-$ 81,100
21,500
25,000
30,800
26,000
19,800
If the required return is 14 percent, should the project be accepted based on the IRR?
Multiple Choice
Yes, because the IRR is 17.07 percent.

O
O
O
O
O
Yes, because the IRR is 17.07 percent.
No, because the IRR is 17.07 percent.
No, because the IRR is 15.75 percent.
Yes, because the IRR is 16.41 percent.
Yes, because the IRR is 15.75 percent.

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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Calculation of internal rate of return (IRR);

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