What is the Internal Rate of Return of the investment with a series of cashflows that results in the following NPVs? - $\$ 600,000$ at a $5 \%$ discount rate;
- $\$ 200,000$ at a $10 \%$ discount rate;
- $( \$ 200,000 )$ at a $15 \%$ discount rate;

Question

Quizplus · Accepted Answer

The IRR is the discount rate that makes the NPV of the cash flows equal to zero. In this case, the NPVs are negative at discount rates lower than 15% and positive at discount rates higher than 15%. Therefore, the IRR must be higher than 15%. Choice (C) is the only option that includes a range of discount rates that includes 15%.

What Is the Internal Rate of Return of the Investment $600,000\$ 600,000$600,000

What Is the Internal Rate of Return of the Investment $\$ 600,000$