Filter Corp. has a project available with the following cash flows:
 

Year	Cash Flow
0	−$13,500	 
1	6,300	 
2	7,600	 
3	4,700	 
4	4,300	 
 
What is the project's IRR?

Multiple Choice

30.61%


28.70%


32.14%


29.85%


27.55%



The **Internal Rate of Return (IRR)** is the rate that makes the Net Present Value (NPV) of all cash flows equal to zero. The IRR is typically found by solving the following equation:

\[
NPV = 0 = -C_0 + \frac{C_1}{(1 + IRR)^1} + \frac{C_2}{(1 + IRR)^2} + \frac{C_3}{(1 + IRR)^3} + \frac{C_4}{(1 + IRR)^4}
\]

Where:
- $ C_0 = -13,500 $
- $ C_1 = 6,300 $
- $ C_2 = 7,600 $
- $ C_3 = 4,700 $
- $ C_4 = 4,300 $

Let's calculate the IRR using these values.

I'll now compute it.The project's Internal Rate of Return (IRR) is approximately **27.55%**.

Thus, the correct answer is:

**27.55%**

Do you want further details or have any other questions? Here are some related questions for further exploration:

1. How does the IRR compare to the project's required rate of return?
2. What is the Net Present Value (NPV) at the IRR?
3. How does IRR relate to the profitability index?
4. How would the IRR change if the initial investment increased?
5. What is the difference between IRR and the modified internal rate of return (MIRR)?

**Tip**: IRR assumes that interim cash flows are reinvested at the IRR itself, which might not always be realistic. Consider using MIRR when reinvestment rates differ.

Filter Corp. has a project available with the following cash flows:

Year	Cash Flow
0	−$13,500
1	6,300
2	7,600
3	4,700
4	4,300

What is the project's IRR?

Multiple Choice

30.61%
28.70%
32.14%
29.85%
27.55%

Learn how to calculate the Internal Rate of Return (IRR) for Filter Corp.'s project with cash flows across 5 years. Detailed steps using NPV and IRR formulas are provided. Suitable for undergraduate finance students.

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