Question

Casa Del Sol Property Development Company is refurbishing a 200-unit condominium complex at a cost of $1,875,000. It expects that this will lead to expected annual cash flows of $415,350 for the next seven years. What internal rate of return can the firm earn from this project

Answer 1

12% internal rate of return can the firm earn from this project

Step-by-step explanation:

Initial investment = $1,875,000

Annual cash flows = $415,350

Length of investment = n = 7 years

To determine the IRR, the trial-and-error approach can be used.

Set NPV = 0.

Try IRR = 12.3%.