What is the internal rate of return (IRR)of an investment that requires an initial investment of $10,000 today and pays $14,000 in one year's time?
A)4%
B)14%
C)24%
D)40%
E)33%

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. In this case, the equation to solve is $10,000 = $14,000 / (1 + IRR), solving for IRR gives an IRR of 40%.

What Is the Internal Rate of Return (IRR)of an Investment