Fenwick Company is considering purchase of equipment that costs $60,000 and is expected to offer annual cash inflows of $16,000 for 5 years. Fenwick Company's required rate of return is 10%. What is the internal rate of return of this investment project?

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 from the investment equal to zero. By calculating the IRR for the given cash flows, it is found to be approximately 11.56%.

Fenwick Company Is Considering Purchase of Equipment That Costs $60,000