Maxwell Feed & Seed is considering a project that has the following cash flow data

Finance Nov 24, 2020

Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the project's IRR? Year 0 1 2 3 4 5 Cash flows $9,500 $2,000 $2,025 $2,050 $2,075 $2,100

2.82%

2.31%

2.08%

2.57%

3.10%

Expert Solution

You need to use a Financial calculator to solve this problem. You can download it.

Press CF Button, CFo = -9,500 (This is the Initial Outflow)

Press Down arrow key, CO1 = 2,000 (Inflow from the project after the end of year 1)

Like this fill CO2=2,025, CO3=2,050, CO4 = 2,075 and CO5 = 2,100

Press IRR button, press CPT, IRR=2.566

So the correct option is the fourth one, that is 2.57%

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