(Appendix 13A)The following data pertain to an investment proposal:
What would be the internal rate of return? (Ignore income taxes in this problem. )

Question

(Appendix 13A)The following data pertain to an investment proposal: 
What would be the internal rate of return? (Ignore income taxes in this problem. )

Quizplus · Accepted Answer

To calculate the IRR, we need to find the discount rate that makes the net present value of the investment equal to zero. Using a financial calculator or Excel formula, we find that the IRR is approximately 13.0%. This is the rate at which the investment's cash inflows (in years 1-5) are equal to its initial cost (in year 0). Therefore, B is the best choice.

(Appendix 13A)The Following Data Pertain to an Investment Proposal