Question
1. Barron, Inc. is considering a four-year project that has an initial outlay or cost of $90,000. The future cash inflows from its project are
1. Barron, Inc. is considering a four-year project that has an initial outlay or cost of $90,000. The future cash inflows from its project are $50,000, $30,000, $30,000, and $30,000 for years 1, 2, 3 and 4, respectively. Darrox uses the internal rate of return method to evaluate projects. What is the approximate IRR for this project?
a. The IRR is between 12% and 20%
b. The IRR is about 28.89%
c. The IRR is less than 12%
d. The IRR is about 22.80%
2. Promix, Inc. is considering a five-year 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 less than 22.50%
b. The IRR is about 17.86%
c. The IRR is about 19.16%
d. The IRR is over 25.50%
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