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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

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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 ...

    Solution Summary

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

    $2.49

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