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An education authority is considering the implementation of a CCTV security system in one of its schools. Details of the proposed project are as follows:
Life of project 5 Years
Initial cost $ 75,000Annual Savings:
Labour costs $ 20,000
Other costs $ 5,000NPV at 15% $ 8,800
Calculate the IRR for this project to the nearest 1%
Please do not simply set me a question to answer.
The purpose of this forum is to help you with specific problems. If you have the question the presumably the answer is also in the book. If you do not understand the answer then say which bit you do not understand.
Have you watched the free lecture on this website on investment appraisal? If you have then you should find this question very straight forward. You know the NPV at 15%, so make a second guess (20% would be a good one to choose), and then approximate from these two in the standard way to get the IRR?
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