Solution-Calculate the internal rate of return for project

Calculate the internal rate of return for project

Assignment Help Corporate Finance

Reference no: EM13195212

The initial cash outlay (in year 0) and resulting cash inflows for three competing projects are presented below. Calculate the internal rate of return for each project (1-3) below using a formula in Excel. Which project would you choose? What if you only had $12,000 in year 0, and the cost of borrowing additional money was prohibitively high?


	Project 1	Project 2	Project 3
Year 0	$ (8,000)	$ (25,000)	$ (10,000)
Year 1	$ 3,000	$ 1,000	$ 1,000
Year 2	$ 3,000	$ 3,000	$ 2,000
Year 3	$ 3,000	$ 8,000	$ 3,000
Year 4	n/a	$ 10,000	$ 4,000
Year 5	n/a	$ 20,000	$ 5,000

IRR

Using the same IRR formula, calculate the internal rate of return for project 4. Why is the result an error?

	Project 4
Year 0	$ 5,000
Year 1	$ 1,000
Year 2	$ 2,000
Year 3	$ 3,000
Year 4	$ 4,000
Year 5	$ 5,000

IRR

Reference no: EM13195212

Questions Cloud

Current state of valuing intellectual property : Discuss this issue and prepare a 3-4 page management brief for Acme's upper management group on the current state of valuing intellectual property.

Sodium sulfate is dissolved to give a nominal concentration : A solution contains 0.010 M silver ion and 0.0010 M lead(II). Sodium sulfate is dissolved to give a nominal concentration of 0.0010 M sulfate. Does a precipitate form?

How far is the balloon from the western station : Two tracking stations are on the equator 124 miles apart. A weather balloon is located on a bearing of N 34deg E from the western stations and on a bearing of N 16deg E from the easter station. How far is the balloon from the western station?

What is the approximate age of the artifact : ]an artifact is discovered at a certain site. if it has 73% of the carbon 14 it originally contained, what is the approximate age of the artifact? (carbon 14 decays at the rate of .0125% annually)

Calculate the internal rate of return for project : Calculate the internal rate of return for project 4. Why is the result an error - What if you only had $12,000 in year 0, and the cost of borrowing additional money was prohibitively high?

Compute how much work is done in kilojoules : How much work is done in kilojoules when the volume of a cylinder goes from 2L to 3L and stays at 2.5 atm? Are the surroundings doing work on the system or system doing work

What are the dimensions of the second triangle : a 7 ft by 9 ft rectangle is similar to a second rectangle whose perimeter is 260 ft, what are the dimensions of the second triangle?

Describe fractional partsso that a child can understand it : Describe fractional partsso that a child can understand it. What are the two distinct requirements of fractional parts? Explain how children's concepts of partitioning need to be refined to produce a concept of fractional parts.

How tall is the cellphone tower : a 6 ft vertical post casts a 10 in shadow at the same time a nearby cell phone tower casts a 115 ft shadow. How tall is the cellphone tower.

User Account

All Pages

Calculate the internal rate of return for project

Reference no: EM13195212

Reference no: EM13195212

Questions Cloud

Reviews

Write a Review

Corporate Finance Questions & Answers

Impact of the global economic crisis on business environment

Explain the short and the long-run effects on real output

Examine the requirements for measuring assets

Financial analysis report driven by rigorous ratio analysis

Calculate the value of the merged company

Stock market project

Write paper on financial analysis and business analysis

Intermediate finance

Average price-earnings ratio

Determine the financial consequences

Prepare a spread sheet model

Principles and tools for financial decision-making

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT