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Perez Company is considering an investment of $29,480 that provides net cash flows of $8,900 annually for four years.
(a) What is the internal rate of return of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided. Round your present value factor to 4 decimals.)
(b) The hurdle rate is 7%. Should the company invest in this project on the basis of internal rate of return?
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Answer :

The internal rate of return of this investment is 8%.

If the hurdle rate is 7%, the investment should be invested in.

What is internal rate of return?

Internal rate of return is a capital budgeting method that determines the the discount rate that equates the after-tax cash flows from an investment to the amount invested

If the internal rate of return is greater than the hurdle rate, the investment should be undertaken. If this is not the case, the investment should not be invested in.

IRR can be calculated with a financial calculator

Cash flow in year 0 =  $-29,480

Cash flow each year from year 1 to 4 = 8900

IRR = 8%

To learn more about IRR, please check: https://brainly.com/question/26484024

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