Ask Question
BusinessBusiness
27 April, 11:41

A company is considering an iron ore extraction project that requires an initial investment of $1,000,000 and will yield annual cash flows of $350,263 for 4 years. The company's hurdle rate is 9%. Calculate IRR. Present Value of an Annuity of $1 5% 6% 7% 8% 9% 10% 15% 1 0.952 0.943 0.935 0.926 0.917 0.909 0.870 2 1.859 1.833 1.808 1.783 1.759 1.736 1.626 3 2.723 2.673 2.624 2.577 2.531 2.487 2.283 4 3.546 3.465 3.387 3.312 3.240 3.170 2.855 5 4.329 4.212 4.100 3.993 3.890 3.791 3.352 A. 15% B. 10% C. 18% D. 12%

+3
Answers (1)
  1. 27 April, 11:50
    0
    A. 15%

    Explanation:

    Period Cash Flow

    0 - 1000000

    1 350263.00

    2 350263.00

    3 350263.00

    4 350263.00

    IRR 0.15000

    Using the financial calculator you can solve for IRR

    also you can try to find it doing

    investment/cash flow = annuity factor

    1,000,000/350,263 = 2.85499753

    If you look for this value in the table you will find n=4 and rate = 15% 2.855

    which is really close to the division we made, so you can say it is 15% without doing the math, if you udnerstand how the table work
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A company is considering an iron ore extraction project that requires an initial investment of $1,000,000 and will yield annual cash flows ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Allison has returned to school after five years out of the work force. She is taking one course at the local university for a cost of $1,500.
Answers (1)
The groups that review research proposals for possible ethical violations are known as:
Answers (1)
The cost of merchandise sold during the year was $54,000. Merchandise inventories increased by $2,000. Accounts payable increased by $3,000.
Answers (1)
Some companies hire an outside consultant to assist in the project team regarding selecting a vendor solution for the project. What is a positive and negative for having an outside consultant involved in the project?
Answers (1)
You purchased a roundtrip ticket to a friend's wedding in Cleveland on Saturday for $400, but on Sunday you discover your return flight is canceled due to weather.
Answers (1)
New Questions in Business
Board Games, Inc. makes board games. The following data pertains to the last six months:Direct Labor HoursManufacturing OverheadMonth 1 45,000 $295,000Month 2 60,000 $320,000Month 3 57,000 $323,000Month 4 52,000 $247,250Month 5 34,000 $178,200Month
Answers (1)
Chick-fil-A's "Eat Mor Chikin" advertising campaign features three cows holding signs that say things like "Save the cows, eat more chicken.
Answers (1)
A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 10) per month and the product has a contribution margin ratio of 40%.
Answers (1)
Silver Trading Corp. recorded a net income of $200,000 for the year 2021. For the same period, the company purchased land for $150,000. It sold some of its long term investments for $50,000 during the period.
Answers (1)
What is the term that refers to a form of wealth that can be stored for the future?
Answers (1)
Home » Business » A company is considering an iron ore extraction project that requires an initial investment of $1,000,000 and will yield annual cash flows of $350,263 for 4 years. The company's hurdle rate is 9%. Calculate IRR.
Sign Up Forgot Password?