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navik
9 days ago
8

A project has cash flows of −$161,900, $60,800, $62,300, and $75,000 for Years 0 to 3, respectively. The required rate of return

is 13 percent. Based on the internal rate of return of _____ percent for this project, you should _____ the project.
Business
1 answer:
arsen [3.2K]9 days ago
7 0
Thus, the internal rate of return stands below the anticipated rate, and therefore the project should be rejected. To elaborate, the cash flow for the project over years 0 to 3 consists of amounts: -$161,900, $60,800, $62,300, and $75,000. The required rate of return is 13%. Let's denote the internal rate of return as y%. At this rate, the present value of inflows equals the present value of outflows, leading to the equation for internal rate of return: 161900 = 60800/1.0y + 62300/1.0y^2 + 75000/1.0y^3. This gives an internal rate of return of y = 10.41%.
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Grade: 9

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