Blinding Light Co. has a project available with the following cash flows: Year Cash Flow 0 −$35,070 1 7,970 2 9,570 3 13,560 4 15,610 5 10,340 What is the project's IRR?

The project's IRR is 17.28%

Explanation:

IRR is the discount rate at which the NPV of the project's cash flow becomes zero. ThNPV calculated using discount rate below IRR is positive and over IRR is negative.

To calculate the IRR using the following formula

IRR = Lower Rate + ( Lower rate NPV / ( Lower rate NPV - Higher rate NPV ) ) x ( Higher rate - Lower rate )

Now calculate the NPV two different rates

NPV at 17%

Year___Cash Flows__Preser value factor 17%__Present value

0($35,070)___( 1 + 17%)^-0 = 1 ($35,070)

1$7,970 ( 1 + 17%)^-1 = 0.8547 $6,812  

2$9,570( 1 + 17%)^-2 = 0.7305 $6,991  

3$13,560___ ( 1 + 17%)^-3 = 0.6244 $8,466  

4$15,610( 1 + 17%)^-4 = 0.5337 $8,330  

5$10,340( 1 + 17%)^-5 = 0.4561 $4,716

NPV $246

NPV at 18%

Year___Cash Flows__Preser value factor 18%__Present value

0($35,070)___( 1 + 18%)^-0 = 1 ($35,070)

1$7,970 ( 1 + 18%)^-1 = 0.8475 $6,754.24  

2$9,570( 1 + 18%)^-2 = 0.7182 $6,873.03

3$13,560___ ( 1 + 18%)^-3 = 0.6086 $8,253.04

4$15,610( 1 + 18%)^-4 = 0.5158 $8,051.46

5$10,340( 1 + 18%)^-5 = 0.4371 $4,519.71

NPV ($618.52 )

Nox place the values in the formula

IRR = 17% + ( ( $246 / ( $246 - ( - 618.52 ) ) ) x ( 18% - 17% )

IRR = 17.28%

his average speed in km per hour is ≈ 55.4 km/h and about 15.4 m/s.