What is the approximate IRR for a project that costs $100,000 and provides cash inflows of $30,000 for six years?
A)19.9 percent
B)30.0 percent
C)32.3 percent
D)80.0 percent

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. For a project that costs $100,000 and provides cash inflows of $30,000 for six years, an IRR of approximately 19.9% is a realistic figure, considering the typical range and behavior of IRRs for such investments. Higher percentages like 30%, 32.3%, or 80% are unusually high for such a cash flow pattern and investment size.

What Is the Approximate IRR for a Project That Costs