Hart Corp.is considering a project that has the following cash flow data.What is the project's IRR? Note that a project's IRR can be less than the cost of capital or negative, in both cases it will be rejected. $$\begin{array} { l c c c c }
\text { Year } & 0 & 1 & 2 & 3 \
\hline \text { Cash flows } & - \$ 1,000 & \$ 425 & \$ 425 & \$ 425
\end{array}$$
A) 12.55%
B) 13.21%
C) 13.87%
D) 14.56%
E) 15.29%

Question

Hart Corp.is considering a project that has the following cash flow data.What is the project's IRR? Note that a project's IRR can be less than the cost of capital or negative, in both cases it will be rejected. $$\begin{array} { l c c c c } 
\text { Year } & 0 & 1 & 2 & 3 \
\hline  \text { Cash flows } & - \$ 1,000 & \$ 425 & \$ 425 & \$ 425
\end{array}$$
A) 12.55%
B) 13.21%
C) 13.87%
D) 14.56%
E) 15.29%

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. To find the IRR, you would typically use financial calculator or software because it involves solving for the rate in the NPV equation. Given the options provided and knowing that calculating the exact IRR requires iterative methods not easily done by hand, the correct answer is chosen based on typical IRR calculation methods or using a financial calculator.

Hart CorpIs Considering a Project That Has the Following Cash Flow