P10–14 Internal rate of return For each of the projects shown in the following table, calculate the internal...

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Finance

P10–14 Internal rate of return  Foreach of the projects shown in the following table, calculate theinternal rate of return (IRR). Then indicate, for each project, themaximum cost of capital that the firm could have and still find theIRR acceptable. I DO NOT HAVE A FINANCIAL CALCULATOR OR ICANNOT USE EXCEL SPREADSHEETS; CAN YOU PLEASE BREAK IT DOWN ON HOWTO FIND THE IRR....THANKS IN ADVANCE
Project B
Project C
Initial investment(CF₀)
?$490,000
?$20,000
Year (t)
**Cash inflows (CF_t)**
1
   $150,000
     $7,500
2
     150,000
       7,500
3
     150,000
       7,500
4
     150,000
       7,500
5
       —
       7,500

	Project B	Project C
1	$150,000	$7,500
2	150,000	7,500
3	150,000	7,500
4	150,000	7,500
5	—	7,500

Answer & Explanation Solved by verified expert

3.6 Ratings (293 Votes)

Internal Rate of Return IRR for Project B Step 1 Firstly calculate NPV at a guessed discount Rate Say 8 R1 Year Annual Cash Flow Present Value factor at 8 Present Value of Cash Flow 1 150000 0925926 138889 2 150000 0857339 128601 3 150000 0793832 119075 4 150000 0735030 110254 TOTAL 496819 Net Present Value NPV Present Value of annual cash inflows Initial Investment 496819 490000 6819 Step See Answer

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