An investment that cost $30,000 provided annual cash inflows of $9,000 per year for five years.The desired rate of return is 10%.What is the internal rate of return from the investment?

Question

Quizplus · Accepted Answer

To calculate the internal rate of return, we need to find the discount rate at which the present value of cash inflows equals the initial cost of the investment. Using a financial calculator or spreadsheet function, the internal rate of return for this investment is 13.61%, which is greater than the desired rate of return of 10%. Therefore, choice C is the best answer.

An Investment That Cost $30,000 Provided Annual Cash Inflows of $9,000