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A firm expects cash flows from an initial investment of 1 000 000$. The expected cash...

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Finance

A firm expects cash flows from an initial investment of 1 000000$. The expected cash flows are as follows:

1.year: 600 000$ , 2.year: 400 000$, 3.year: 350 000$, 4.year:300 000$

If the cost of capital is 16%, what is approximate IRR of thisinvestment project? Do you accept this investment project?

Answer & Explanation Solved by verified expert
3.8 Ratings (410 Votes)
IRR is that Discount rate at which NPV is 0 We will calculate NPV at 20 and 25 then will find out IRR by approximate IRR formula Year Cash flows    See Answer
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A firm expects cash flows from an initial investment of 1 000000$. The expected cash flows are as follows:1.year: 600 000$ , 2.year: 400 000$, 3.year: 350 000$, 4.year:300 000$If the cost of capital is 16%, what is approximate IRR of thisinvestment project? Do you accept this investment project?

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