Consider the following cash flows: Year Cash Flow 0 - $ 32,500 1 14,800 2 16,900 3 12,200 What is the IRR of the above set of cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.) Internal rate of return %

Question

Brice Nicholson

Business

26 March, 23:36

Consider the following cash flows: Year Cash Flow 0 - $ 32,500 1 14,800 2 16,900 3 12,200 What is the IRR of the above set of cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.) Internal rate of return %

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Answers (1)

Know the Answer?

Richard Watts · Answer 1

The correct answer is 17.22%.

Explanation:

According to the scenario, the computation of the given data are as follows:

Let IRR be X, then we can calculate the IRR by using following formula:

Year 0 = Year 1 cash flow : (1 + IRR) ^1 + Year 2 Cash flow : (1 + IRR) ^2 + Year 3 Cash flow : (1 + IRR) ^3 + Year 0 Cash flow

By putting the value, we get

0 = $14,800 : (1 + X) ^1 + $16,900 : (1 + X) ^2 + $12,200 : (1 + X) ^3 - $32,500 By solving the function

IRR = 17.22%