Following is a table for the present value of $1 at compound interest: Following is a table for the present value of an annuity of $1 at compound interest:
-Using the tables provided, the internal rate of return of an investment of $227,460 that would generate an annual cash inflow of $60,000 for the next 5 years is

Question

Following is a table for the present value of $1 at compound interest:  Following is a table for the present value of an annuity of $1 at compound interest:  ​
-Using the tables provided, the internal rate of return of an investment of $227,460 that would generate an annual cash inflow of $60,000 for the next 5 years is

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of cash flows equal to zero. To find the IRR, we need to find the rate at which the present value of $60,000 received annually for 5 years equals the initial investment of $227,460. Using present value annuity tables or financial calculators, 10% is the rate that closely matches this condition.

Following Is a Table for the Present Value of $1