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? *

Question

02-10-2021
Business

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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 :

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Klementk Klementk · Answer 1 · 2021-10-02T05:42:22-04:00

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%

Sagot :

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