Quasar Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Please use the tables below and determine the internal rate of return. Please choose the percentage below that comes closest to the actual IRR.

Question

Quasar Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Please use the tables below and determine the internal rate of return.  Please choose the percentage below that comes closest to the actual IRR.

Quizplus · Accepted Answer

Using the tables, we find that at a discount rate of 9%, the net present value of the investment is closest to zero. Therefore, the internal rate of return is approximately 9%.

Quasar Company Is Evaluating an Investment That Will Cost $520,000