What is the IRR of the following set of cash flows? $$\begin{array} { | c | r | }
\hline \text { Year } & \text { Cash Flow } \
\hline 0 & - \$ 61,300 \
\hline 1 & 18,900 \
\hline 2 & 64,500 \
\hline 3 & 7,600 \
\hline
\end{array}$$
A)12.93 percent
B)14.90 percent
C)23.86 percent
D)16.33 percent
E)17.78 percent

Question

What is the IRR of the following set of cash flows? $$\begin{array} { | c | r | } 
\hline \text { Year } & \text { Cash Flow } \
\hline 0 & - \$ 61,300 \
\hline 1 & 18,900 \
\hline 2 & 64,500 \
\hline 3 & 7,600 \
\hline
\end{array}$$
A)12.93 percent
B)14.90 percent
C)23.86 percent
D)16.33 percent
E)17.78 percent

Quizplus · Accepted Answer

Using a financial calculator or Excel, the IRR of these cash flows is found to be approximately 23.86 percent. Alternatively, we could guess and check various interest rates until we find the one that sets the present value of the cash flows equal to the initial investment of $61,300. The highest interest rate that comes close to doing this is also approximately 23.86 percent.

What Is the IRR of the Following Set of Cash