A company has the following pattern of cash flows. Today -$47 000, Year 1 -$15 500, Year 2 + $16 000, Year 3 + $35 000, Year 4 + $57 000. What is the IRR?
A) 9.301%
B) 29.301%
C) 19.301%
D) 39.301%
E) 49.301%

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. IRR can be found using financial calculators or spreadsheet software by inputting the cash flows and solving for the discount rate. In this case, the correct IRR is 19.301%, which is found by setting the NPV of the given cash flows to zero and solving for the rate.

A Company Has the Following Pattern of Cash Flows