I sign a contract that guarantees me an immediate payment of $2 000, but then I have to invest $800 a year for ten years. At the end of the tenth year I get a further payment of $8 000. What is my internal rate of return on the contract?
A)There are two solutions: 8% and 16%.
B)There are two solutions: 13% and 25%.
C)There are two solutions, 15% and 30%.
D)There are two solutions: 18% and 24%.
E)There is a single solution: about 22%.

Question

Quizplus · Accepted Answer

The Answer of I sign a contract that guarantees me an immediate payment of $2 000, but then I have to invest $800 a year for ten years. At the end of the tenth year I get a further payment of $8 000. What is my internal rate of return on the contract?
A)There are two solutions: 8% and 16%.
B)There are two solutions: 13% and 25%.
C)There are two solutions, 15% and 30%.
D)There are two solutions: 18% and 24%.
E)There is a single solution: about 22%.

I Sign a Contract That Guarantees Me an Immediate Payment