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
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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 ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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