A company has a project with a 4-year life, requiring an initial investment of $167,500, and is expected to yield annual cash flows of $54,000. What is the internal rate of return?

IRR Factora	=	Investmentb
		Annual cash flowsc

^aIRR Factor: This is the factor which youll use on the table for the present value of an annuity of $1 dollar in order to find the percentage which corresponds to the internal rate of return.

^bInvestment: This is the present value of cash outflows associated with a project. If all of the investment is up front at the beginning of the project, the present value factor is 1.000.

^cAnnual Cash Flows: This is the amount of cash flows to be received annually as a result of the project.

Calculation Steps

Present Value of an Annuity of $1 at Compound Interest.

IRR Factor =$= , rounded to 6 decimals$