A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,500 1 12,500 2 15,500 3 11,500 If the required return is 13 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

18.49%

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

The IRR can be calculated using a financial calculator:

Cash flow in year 0 = –$28,500

Cash flow in year 1 = $12,500

Cash flow in year 2 = 15,500

Cash flow for year 3 = $11,500

IRR = 18.49%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

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