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What is the IRR for the following project if its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,300,000 in year 4

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Answer:

13.57%

Explanation:

Given the data :

Initial after tax cost = 5,000,000

Cash inflows:

Year 1 : $1,800,000

Year 2 : $1,900,000

Year 3 : $1,700,000

Year 4 : $1,300,000

The Internal rate of return can be obtained using the excel ;

IRR(Series of cash flow)

If the data above were inputed in an excel sheet from cell A1 to cell A4 ;

IRR(A1:A4)

Internal rate of return value obtained is 13.57%

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