Kannan Enterprise Has a Project with an Initial Outlay of $40,000,followed

Kannan Enterprise has a project with an initial outlay of $40,000,followed by three years of annual incremental cash flows of $35,000.The terminal cash flow of the project is $10,000.Assuming a discount rate of 10%,which of the following is the correct equation to solve for the IRR of the project?

A) $40,000 = $35,000(1.12) ¹ + $35,000(1.12) ² + $45,000(1.12) ³
B) $40,000 = $35,000(1 + IRR) ¹ + $35,000(1+IRR) ² + $45,000(1+IRR) ³
C) $40,000 = $35,000/(1.12) ^IRR + $35,000/(1.12) ^IRR + $45,000/(1.12) ^IRR
D) $40,000 = $35,000(1+IRR) ^-1 + $35,000(1.IRR) ^-2 + $45,000(1+IRR) ^-3

Correct Answer:

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