An office complex was acquired for $1,500,000 in 2014.Cash flows to the investor were received at the end of each year,as follows: 2014 - $250,000; 2015 - $400,000; 2016 - $600,000; 2017 - $600,000.The property was sold for $1,850,000 at the end of 2017.Calculate the IRR for this property.

Question

Quizplus · Accepted Answer

To calculate the internal rate of return (IRR), we need to find the discount rate at which the present value of all cash inflows equals the initial investment ($1,500,000).

Using a financial calculator or Excel, we can input the cash flows and solve for the IRR, which turns out to be 31.6%.

Therefore, Choice C is the correct answer.

An Office Complex Was Acquired for $1,500,000 in 2014