Consider the following project cash flow. YEAR CASH FLOW 0 -1000 1 500 2 500 3 500 4 500 5 500 Use this information to calculate the Internal Rate of Return by linear interpolation(the trial and error method). WITH WORKING PLEASE

Consider the following project cash flow. YEAR CASH FLOW 0 -1000 1 500 2 500 3 500 4 500 5 500 Use this information to calculate the Internal Rate of Return by linear interpolation(the trial and error method). WITH WORKING PLEASE

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 7MC: Calculate the project cash flows for each year. Based on these cash flows and the average project...

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Question

Consider the following project cash flow.

YEAR	CASH FLOW
0	-1000
1	500
2	500
3	500
4	500
5	500

Use this information to calculate the Internal Rate of Return by linear interpolation(the trial and error method).

WITH WORKING PLEASE

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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Step 3 Let Rate =42% = 0.42

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