A project has the following cash flows below. What is the internal rate of return of this project? Year 0 £10,500 initial investment Year 1 £4,486 cash inflow Year 2 £3,915 cash inflow Year 3 £3,206 cash inflow Year 4 £2,677 cash inflow 11% C. 15% 13% D. 17%

A project has the following cash flows below. What is the internal rate of return of this project? Year 0 £10,500 initial investment Year 1 £4,486 cash inflow Year 2 £3,915 cash inflow Year 3 £3,206 cash inflow Year 4 £2,677 cash inflow 11% C. 15% 13% D. 17%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A project has the following cash flows below. What is the internal rate of return of this project?

Year 0 £10,500 initial investment

Year 1 £4,486 cash inflow

Year 2 £3,915 cash inflow

Year 3 £3,206 cash inflow

Year 4 £2,677 cash inflow

11% C. 15%
13% D. 17%

Please show the solution

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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