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Question: A company is considering an investment project that requires an initial investment of $150,000. The project is expected to generate cash flows over five years as follows: Year 1: $40,000 Year 2: $35,000 Year 3: $30,000 Year 4: $25,000 Year 5: $20,000 Calculate the internal rate of return (IRR) for this project. Answer: To calculate the IRR for this project, we need to find the discount rate that makes the net present value (NPV) of the project equal to zero. You can use a financial calculator, spreadsheet software, or trial and error to find the IRR. Using a financial calculator or spreadsheet software, you can find that the IRR for this project is approximately 18.38%. The IRR is the rate at which the project's cash flows result in a zero NPV. In this case, it's approximately 18.38%, indicating the expected rate of return for this investment project.
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