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 their rate of return on this venture?

Question

Quizplus · Accepted Answer

The rate of return can be calculated using the internal rate of return (IRR) formula for cash flows. The cash flows are -$136,000 for 4 years and $685,000 in the fifth year. Solving for IRR gives approximately 15.59%.