What is the internal rate of return (IRR) of an investment that requires an initial investment of $10,000 today and pays $14,000 in one year's time?

Question

Quizplus · Accepted Answer

The IRR is the rate that makes the net present value (NPV) of the investment zero. Here, $10,000 invested today grows to $14,000 in one year. The IRR is calculated as ($14,000 - $10,000) / $10,000 = 0.40 or 40%.

What Is the Internal Rate of Return (IRR) of an Investment