Annual expenses increase

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Consider the financial data for the following project. The annual revenue and annual expenses occur at the end of years 1 through 5 and the salvage value is recouped at the end of the 5 years.

Initial investment: $98,000

Annual revenue: $33,000

Annual expenses in year 1: $8,500

Salvage value: $10,000

Project life (years): 5

If the annual expenses increase at an annual rate of 7.8% compared to the previous year's expenses, but the annual revenue is unchanged, what is the IRR for the project? Express your answer as percentage between 0 and 100.

Reference no: EM131906427

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