contestada

The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $400,000. The Sisyphean Company expects cash inflows from this project as detailed below: Year 1 Year 2 Year 3 Year 4 $157,452.98 $157,452.98 $157,452.98 $157,452.98 The appropriate discount rate for this project is 15%. The internal rate of return (IRR) for this project is closest to ________.

A.
13%

B.
16%

C.
21%

D.
24%

Respuesta :

TomShelby

Answer:

C.

21%

Explanation:

As all cashflow are the same, we can solve by dividing the initial cost by annuity per year and look into the PV of a $1 annuity table the result of this quotient:

4000/157,452.98 = 2.540440962

We will find in the row of n = 4 that at 21% we obatin this answer so that is the IRR for the invetment project.

Otras preguntas