Refer to Cantar, Inc. What is the internal rate of return for the investment?

Question

Quizplus · Accepted Answer

To calculate the internal rate of return for the investment in Cantar, Inc., we need to set the present value of the expected cash inflows equal to the initial investment and solve for the discount rate that makes this equation hold. Using the given cash flow projections and a financial calculator or Excel, we can find that the internal rate of return is approximately 12%. This means that the investment is expected to generate a return of 12% per year, which is higher than the company's cost of capital of 10%. Therefore, investing in Cantar, Inc. would be a good choice for the company.