Looking for reliable answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Our platform connects you with professionals ready to provide precise answers to all your questions in various areas of expertise. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

ABC Co wishes to undertake a project requiring an investment of $732,000 which will generate equal annual inflows of $146,400 in perpetuity. If the first inflow from the investment is a year after the initial investment, what is the IRR of the project? *

Sagot :

Answer:

The IRR of the project is 13%.

Explanation:

ABC Co wishes to undertake a project requiring an investment of $732,000 which will generate equal annual inflows of $146,400 in perpetuity. If the first inflow from the investment is a year after the initial investment, what is the IRR of the project?

   

The first inflow from the investment is a year after the initial investment. Solving for "n", we get:

$2,548,831 = 732000/(1 + n)^1

$732,000/((1*(1+n))^1) = $2,548,831

$n = ln(($2,548,831)/$732000)

Using the function of n that we found above:

$n = ln((($2,548,831/$732000))/1)  

Plugging in for "n" to get the IRR:

IRR = 13%