IRR

You wish to evaluate a project requiring an initial investment of $45,000 and having a useful life of 5 years. What minimum amount of annual cash inflow do you need if your firm has an 8% cost of capital? If the project is forecast to earn $12,500 per year over the 5 years, what is its IRR? Is the project acceptable?

Cost of capital                  8%
Annual Cash flows
Year 0                          (45,000.00)
Year 1                           11,270.54
Year 2                           11,270.54
Year 3                           11,270.54
Year 4                           11,270.54
Year 5                           11,270.54
NPV                                    –