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What can I do to stop getting that error code? The internal rate of return (IRR) refers to the compound annual rate of return that
What can I do to stop getting that error code?
The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case of Blue Llama Mining Company: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because percentages and returns are easier to understand and to compare to required returns. Blue Llama Mining Company's WACC is 9%, and project Delta has the same risk as the firm's average project. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 Year 3 $350,000 $475,000 $400,000 Year 4 $475,000 Which of the following is the correct calculation of project Delta's IRR? O 5.01% O 5.51% 04.01% 0 4.51% If this is an independent project, the IRR method states that the firm should If the project's cost of capital were to increase, how would that affect the IRR? O The IRR would increase. O The IRR would not change. O The IRR would decrease. Help Tools Data Window Book7 Data Review View Qv Search Sheet 8+ Share Excel File Edit View Insert Format o. Dans = Home Insert Page Layout Formulas B8 X V fx =IRR(B2:B6) A B C D E Year Cash flows 0 1500000 350000 475000 400000 4 475000 F G H I IRR #NUM! Sheet1 + Ready 6 CO - - + 100%Step by Step Solution
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