Question For the project shown in the following table, calculate the internal ra

Q: Question For the project shown in the following table, calculate the internal ra

Year CashFlow 0 (100,000) 1 20,000 2 35,000 3 25,000 4 30,000 5 10000 IRR 6.88% The Maximum cost of capital is 6.88% ,Cost of capital below 6.88% is good .if it is beyond 6.88% is loss because IRR is 6.88% Year CashFlow 0 (100,000) 1 20,000 2 35,000 3 25,000 4 30,000 5 10000 IRR 6.88%

ID: 2766567 • Letter: Q

Question

Question For the project shown in the following table, calculate the internal rate of return. Then indicate, for the project, the maximum cost of capital that the firm could have and still find the IRR acceptable. What is the project's IRR?

I figured out the IRR is 6.88% using Excel. How do I calculate the "maximum cost of capital that the firm could have and still find the IRR acceptable?

$10,000

Initial investment $100,000 Year (t) Cash inflows 1 $20,000 2 $35,000 3 $25,000 4 $30,000 5

$10,000

Explanation / Answer

Year

CashFlow

(100,000)

20,000

35,000

25,000

30,000

10000

IRR

6.88%

The Maximum cost of capital is 6.88% ,Cost of capital below 6.88% is good .if it is beyond 6.88% is loss because IRR is 6.88%