Iron Works International is considering a project that will produce annual cash flows of $36,900, $45,600, $56,300, and $21,800 over the next four years, respectively. What is the internal rate of return if the project has an initial cost of $114,100?

15.87%

Explanation:

Internal rate of return is a method of calculating an investment’s rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk.

Let IRR be x%

IRR, present value of inflows=present value of outflows.

114100=36900/1.0x+45600/1.0x^2+56300/1.0x^3+21800/1.0x^4

Hence

x = IRR = 15.87%

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a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.