Solution-What is the internal rate of return

What is the internal rate of return

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Reference no: EM132637815

Development of a project can be completed all at once or worked in 3 stages. If worked all at once, the initial cost will be $900K. In stages, it will be $500K up front, then $300K in year 3 and $200K in year 6. Revenue for the project is expected to be $100K in the first year, then increase by 5K per year over the 12 year life of the project.

Determine the following using Excel.

a. What is the internal rate of return if the project is developed all at once?

b. What is the internal rate of return if the project is worked in 3 stages?

c. For the 3 stage project, compute the project balances over time (PBt). Determine if the IRR calculated is unique for the cash flow.

Checkpoint: PB3 = -615.6

d. Based on the economic analysis, should be project be worked in stages?

Reference no: EM132637815

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What is the internal rate of return

Reference no: EM132637815

Reference no: EM132637815

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