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# Calculating IRR for the given projects

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Calculate the internal rate of return on the following projects:

Initial outlay of \$50,000 with an after-tax cash flow of \$10,000 per year for eight years

Initial outlay of \$600,000 with an after-tax cash flow of \$120,000 per year for ten years

Initial outlay of \$25,000 with an after-tax cash flow \$11,500 per year for three years

##### Solution Summary

The solution describes the steps to calculate Internal Rate of Return (IRR) for the given projects.

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Solution:

Initial outlay of \$50,000 with an after-tax cash flow of \$10,000 per year for eight years

Since after tax cash flow is same throughout the tenure
PV annuity factor =Initial outlay/after tax cash flow=50000/10000=5
Now look PV factor=5.0000 and n=8 into "present value ...

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• BEng (Hons) , Birla Institute of Technology and Science, India
• MSc (Hons) , Birla Institute of Technology and Science, India
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