The future cash flows of a stand-alone capital project are as follows: $\begin{array}{lllll}
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flow } & (\$20,000) & \$ 10,000 & \$ 15,000 & \$ 27,300
\end{array}$ The internal rate of return for this project is approximately:

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of the cash flows equal to zero. Calculating the IRR for the given cash flows results in approximately 16%.