Question

a project has an initial cost of $57,000 and is expected to generate a single cash inflow of $73,000 in 6 years. what is its irr?

Answer 1

A project will initially cost $57,000 and will produce a single cash inflow of $73,000 over the course of 6 years. 4.20% is the IRR.

An IRR is defined.

A financial analysis tool used to determine the profitability of possible investments is the internal rate of return (IRR). In a discounted cash flow analysis, the IRR is the discount rate that reduces all cash flows' net present values (NPV) to zero. The formula used in NPV calculations also applies to IRR estimates.

An increase in IRR typically translates into an increase in return on investment. In the area of commercial real estate, an IRR of 20%, for instance, would be regarded as favorable, but it's crucial to keep in mind that it's always tied to the cost of capital.

anticipated cash flow at the end of six years= $73,000

Initial cost=$57,000

Expected cash inflow= 57,000$(1+r)^{n}$

73,000= 57000$(1+r)^{6}$

r= 0.042096= 4.20%

Learn more about internal rate of return (IRR): https://brainly.com/question/28288572

#SPJ4