Pet World is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected. Year 0 1 2 3 4 5 Cash flows - $9,500 $2,000 $2,025 $2,050 $2,075 $2,100 Select one:

a. 2.08%

b. 2.31%

c. 2.57%

d. 2.82%

e. 3.10%

Question

Brock

Business

8 March, 17:18

Pet World is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected. Year 0 1 2 3 4 5 Cash flows - $9,500 $2,000 $2,025 $2,050 $2,075 $2,100 Select one:

a. 2.08%

b. 2.31%

c. 2.57%

d. 2.82%

e. 3.10%

+5

Answers (1)

Know the Answer?

Aidan Wong · Answer 1

C) 2.57%

Explanation:

Pet World's net cash flows:

Year Cash flow

0 - $9,500

1 $2,000

2 $2,025

3 $2,050

4 $2,075

5 $2,100

In order to find the rate of return we can use an excel spreadsheet and the IRR function = IRR (values,[guess]) = IRR (-9500,2000,2025,2050,2075,2100)

=IRR = 2.57%