A Company Is Considering a 5-Year Project

question 157

Essay

A company is considering a 5-year project. It plans to invest $62,000 now and it forecasts cash flows for each year of $16,200. The company requires a hurdle rate of 12%. Calculate the internal rate of return to determine whether it should accept this project. Selected factors for a present value of an annuity of $1 for five years are shown below:
$\begin{array} { l l } \text { Interest rate } & \text { Present value of an annuity of } \$ 1 \\ & \text { factor } \\ 10 \%& 3.7908 \\12 \%& 3.6048 \\14 \% & 3.4331 \end{array}$

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