Flynn, Inc. is considering a four-year project that has an initial outlay or cost of $80,000. The future cash inflows from its project are $40,000, $40,000, $30,000, and $30,000 for years 1, 2, 3 and 4, respectively
Flynn uses the internal rate of return method to evaluate projects. What is the approximate IRR for this project?
A) The IRR is less than 12%.
B) The IRR is between 12% and 20%.
C) The IRR is about 24.55%.
D) The IRR is about 28.89%.
Answer: D
Explanation: D) Using a financial calculator or software program like Excel or trial and error, we get IRR = 28.89% if we round our answer to two decimal places.
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