Moepro, Inc. is considering a fiveyear project that has an initial outlay or cost of $120,000. The respective future cash inflows from its project for years 1, 2, 3, 4 and 5 are: $55,000, $45,000, $35,000, $25,000, and $15,000. Moepro uses the internal rate of return method to evaluate projects. What is the project's IRR? A. The IRR is over 25.50%. B. The IRR is about 17.86%. C. The IRR is less than 22.50%. D. The IRR is about 19.16%.

B. The IRR is about 17.86%.

Explanation:

The Calculation of the Project`s Internal Rate of Return (IRR) can be done using a Financial Calculator as follows ;

-$120,000       CFj

$55,000          CFj

$45,000          CFj

$35,000          CFj

$25,000          CFj

$15,000           CFj

Shift IRR          17,8557 or 17.86 % (2 decimal places)

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