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Redbird Company is considering a project with an initial investment of $270,000 in new equipment that will yield annual net cash flows of $55,464 each
Redbird Company is considering a project with an initial investment of $270,000 in new equipment that will yield annual net cash flows of $55,464 each year over its seven-year life. The company's minimum required rate of return is 12%. (Click here to see present value and future value tables) A. What is the internal rate of return? 8 X.% B. Should Redbird accept the project based on IRR? NO Feedback Check My Work To find IRR using the present value tables when cash flows are equal, use the following formula: Present Value Factor Initial investment Cost / Annual Net Cash Flows Next, find the present value factor in the present value table in the row with the corresponding number of periods (n). The corresponding interest rate at the number of periods (n) is the IRR. When cash flows are equal, use the Present Value of an Ordinary Annuity table to find IRR
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