1A)

The Alpha Centauri Dance Club is evaluating a project based on the following estimated cash flows:

0	1	2	3	4
-$50,000	$15,000	$17,500	$17,500	$25,000

A discount rate of 20% is used to evaluate all the companies potential projects. You may have rounding errors in your calculations so choose the closest answer. Assume cash flows are received equally over the year.

What is the INTERNAL RATE OF RETURN of the project shown above?

a. No IRR

b. 16.88%

c. 15.41%

d. 14.27%

e. 3.92%

ANSWER