Blue Bird Café is considering a project with an initial cost of $46,800, and cash flows of $8,500, $25,000, $19,000, and -$4,500 for Years 1 to 4, respectively. How many internal rates of return do you expect this project to have?

Respuesta :

Answer:

Two IRRS

Explanation:

the internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

The IRR of an unconventional project is more than one.

An unconventional project is a project with more than one cash outflow.

In this question, there are two cash outflows, so the IRR would be two

I hope my answer helps you

Answer:

I expect two internal rates of return

Explanation:

The first rate of return would consider an initial  cash outflow of $46,800 while the second internal rate of return considers the cash outflow of $4,500

The rule of thumb in deciding the number of internal rate of return is count the number of capital outflows in  the scenario which gives a perfect way to deal with the question,the two negative amounts occur in year 1 and 4 respectively.