Brinker,Inc. has been investing $136,000 a year for the past 4 years into a business venture. Today,Brinker sold that venture for $685,000. What is its rate of return on this venture?

Question

Quizplus · Accepted Answer

The rate of return can be calculated using the formula for the internal rate of return (IRR) on the cash flows: -136,000 for each of the first 4 years and +685,000 in the fifth year. The IRR that equates these cash flows is approximately 15.59%.