A project will produce an operating cash flow of $7,500 a year for 8 years. The initial fixed asset investment in the project will be $35,000. The net aftertax salvage value is estimated at $3,500 and will be received during the last year of the project's life. What is the IRR?

A project will produce an operating cash flow of $7,500 a year for 8 years. The initial fixed asset investment in the project will be $35,000. The net aftertax salvage value is estimated at $3,500 and will be received during the last year of the project's life. What is the IRR?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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