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What is the internal rate of return or irr of the project

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Bill plans to open a do-it-yourself taco and margarita station in a hotel main lobby for guests who have to wait a long time to check in. The equipment will cost $50,000. Bill expects the net cash inflows to be $15,000 annually for 8 years and then sell the equipment for $2,500 at the end of year 8. He will then retire to the beaches of Jamaica.

Problem a) What is the Internal Rate of Return (IRR) of this project? A comparable project is earning 30% .Should weaccept/reject this project?

Option 1: 25.1964% / Reject

Option 2: 26.0000% / Accept

Option 3: 25.2574% / Reject

Option 4: 25.2574% / Accept

Reference no: EM132684010

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