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Chrome File Edit View History Bookmarks People Window Help 'AI 81% Mon 8:38 PM Hassan Alsaihati QE . / D Assignment 11-GRADED-O × e e You're Trying To Determine W Hassan × ezto.mheducation.com/hm.tpx :: Apps UWM-, hotmail A ALEKS DI Mathway PEX Expedia CR E EagleRider Rentals AT&T; Pay Onlir at VIP C D wileyPLUSJeiJ Question 3 (of 6) ! Save & Exit | | Submit I value: 1.00 points A firm evaluates all of its projects by applying the IRR rule Year Cash Flow S 146,000 70,000 69,000 53,000 What is the project's IRR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return If the required return is 16 percent, should the firm accept the project? V (Click to select) Yes No eBook &Resources; eBook Internal Rate of Retu

Explanation / Answer

NPV is calculated by discounting the cashflows

PV = C/(1+r)^n

C - Cashflow

r - Discount rate

n - years to the cashflow

NPV = -146000 + 70000/(1+IRR)^1 + 69000/(1+IRR)^2 + 53000/(1+IRR)^3 = 0

By trail and error, IRR = 15.82%

IRR = 15.82%

b. No. If the required return is 16%, project should not be accepted. IRR is less than required rate.

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