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What is the project internal rate of return

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Question - Suppose a firm is considering starting a new product line that it expects will yield free cash flows of $106,097 in year 1, $118,995 in year 2, $92,830 in year 3, and $136,850 in year 4. The new line would require the installation today of a new piece of equipment that will cost $270,000. The project is considered by management to be of average risk, and the firm's cost of capital is 10%.

Plot the cash flows from the project on the timeline below:

Year 0 Cash flow

Year 1 Cash flow

Year 2 Cash flow

Year 3 Cash flow

Year 4 Cash flow

What is the project's net present value (NPV)?

What is the project's internal rate of return (IRR)?

What is the project's modified internal rate of return (MIRR)?

What is the project's payback period?

Reference no: EM132976132

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