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    Internal Rate of Return Example

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    The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some
    new machinery costing $450,000. The Sisyphean Company expects cash inflows from this project as
    detailed below:

    Year One Year Two Year Three Year Four
    $200,000 $225,000 $275,000 $200,000

    The appropriate discount rate for this project is 16%.

    The IRR for this project is closest to:
    Choose one answer.
    a. 18.9%
    b. 22.7%
    c. 39.1%
    d. 34.1%

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    Solution Summary

    This solution provides an Excel document, charting the calculations necessary to find the internal rate of return for the given example.