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17 September, 13:53

a project with an initial cost of 63800 is expected to generate annual cash flow of 16580 for the next 6 years what is the Project's internal rate of return

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  1. 17 September, 14:47
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    We have:

    Initial cost (PV) = 63800

    Annual cash flow (Pmt) = 16580

    N = 6

    Since the cash flows are conventional in nature, we can use the following formula to calculate the IRR:

    PV = Pmt x PVIFA (N, R)

    63800 = 16,580 x PVIFA (6, R)

    PVIFA (6, R) = 3.84800965

    Solving for R using PV of annuity table, we get R = 9.4162%

    Therefore, Internal rate of return would be 9.4162%.
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