IRR-Donalds Inc

Question

Problem 4. Donald’s -

 

IRR Donald’s Inc. is evaluating a project that has the following annual free cash flows:

 

Period                         0          1  

Free Cash Flow       −175       200

 

What is the project’s IRR? *Make sure to input all percentage answers as numeric values without symbols, and use four decimal places of precision. For example, if the answer is 6%, then enter 0.0600.

Answer 1

-175 + 200/(1 + IRR) = 0

200/(1 + IRR) = 175

200 = 175 + 175 IRR

25 = 175 IRR

IRR = 1/7 = .1429