Suppose a project will provide an immediate cash inflow of $10,000. For each of the next 15 years it will generate a negative cash flow of $1,000. What is the project's IRR, and is the project worth undertaking if its opportunity cost is 8%?

- the project's IRR is 5.56%.

- the project is not worth undertaking because the IRR is lower than the cost of capital of 8%.

Explanation:

Calculation of IRR of Project using a Financial Calculator :

$10,000    CFj

($1,000)         CFj

15                  Shift Nj

Shift IRR/YR5.56%

We should always accept project that have an Internal rate of return higher than the Cost of Capital.

In our case, the IRR is lower than the opportunity cost of 8%, therefore the project is not worth undertaking.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know