Problem 7 Intro You've estimated the following cash flows (in $) for a project: A B Year Cash flow 2 0 -5,100 3 1 1,325 4 2 2,148 3 2,782 The required return for the project is 8%. B Attempt 1/5 for 10 pts. Part 1 What is the IRR for the project? 9.70% Correct The IRR is that discount rater that sets the NPV to zero: CF CF2 CF3 NPV = CF. + 1+r (1 + r)? (1 + r) 1,325 2,148 2,782 0= -5,100 + + 1 +r (1 + r)? (1 + r) Since this is a non-linear equation, we have to use trial and error, a financial calculator, or Excel. Using Excel's IRR function: = IRR(B2:B5) = 0.097 (if you get 0, display more decimal places) Part 2 Attempt 1/5 for 10 pts. Should you accept the project? Yes Submit