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Moepro, Inc. is considering a fiveyear project that has an initial outlay or cost of​ $120,000. The respective future cash inflows from its project for years​ 1, 2,​ 3, 4 and 5​ are: $55,000,​ $45,000, $35,000,​ $25,000, and​ $15,000. Moepro uses the internal rate of return method to evaluate projects. What is the​ project's IRR? A. The IRR is over​ 25.50%. B. The IRR is about​ 17.86%. C. The IRR is less than​ 22.50%. D. The IRR is about​ 19.16%.

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Answer:

B. The IRR is about​ 17.86%.

Explanation:

The Calculation of the Project`s Internal Rate of Return (IRR) can be done using a Financial Calculator as follows ;

-$120,000       CFj

$55,000          CFj

$45,000          CFj

$35,000          CFj

$25,000          CFj

$15,000           CFj

Shift IRR          17,8557 or 17.86 % (2 decimal places)

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