Question

Q20) An initial outlay of RM11,000 for a project will result in a cashflow of RM2,000 at the end of Year 1, RM5,000 at the end of Year 2 and RM8,000 at the end of Year 3. Assuming a prevailing interest rate of 8%, the internal rate of return for the project is closest to: A. 14% B. 15% C. 16% D. Not available because of multiple rates of return

          Q20)
An initial outlay of RM11,000 for a project will result in a cashflow of RM2,000 at the end of Year 1, RM5,000 at the end of Year 2 and RM8,000 at the end of Year 3.
Assuming a prevailing interest rate of 8%, the internal rate of return for the project is
closest to:

A. 14%
B. 15%
C. 16%
D. Not available because of multiple rates of return

Q20)
An initial outlay of RM11,000 for a project will result in a cashflow of RM2,000 at the end of Year 1, RM5,000 at the end of Year 2 and RM8,000 at the end of Year 3.
Assuming a prevailing interest rate of 8%, the internal rate of return for the project is
closest to:

A. 14%
B. 15%
C. 16%
D. Not available because of multiple rates of return

Added by Arvis C.

Algebra and Trigonometry

James Stewart, Lothar Redlin, Saleem… 4th Edition

Chapter 4

Instant Answer

Solved by Expert Nick Johnson

12/08/2023

Step 1

In this case, we need to find the IRR that satisfies the following equation: -11,000 + 2,000/(1+IRR) + 5,000/(1+IRR)^2 + 8,000/(1+IRR)^3 = 0 This equation cannot be solved analytically, and we need to use numerical methods or financial calculator to find the Show more…

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