Landy Company Is Using the Internal Rate of Return Method

Landy Company is using the internal rate of return method to decide whether to make an investment that will cost $120,000 and which is expected to generate economic resources for 5 years. Landry determines the IRR is 3.12. What information does the IRR provide?

A) Landy expects to earn 3.12% of its investment as cash flows each year the asset is used.
B) Landy expects to earn a 3.12% return over the life of its investment.
C) Landy expects the asset will produce profits equal to 3.12% of the asset's cost each year.
D) Landy expects to recover its cash over 3.12 years.