Elizabeth Myers invested in a project that required an initial amount of $1,560, and returned one cash inflow of $12,000 at the end of the 18th year.A partial table of the present value of an annuity of $1 in arrears is as follows:
What is the internal rate of return for this investment?

Question

Elizabeth Myers invested in a project that required an initial amount of $1,560, and returned one cash inflow of $12,000 at the end of the 18th year.A partial table of the present value of an annuity of $1 in arrears is as follows:
 What is the internal rate of return for this investment?

Quizplus · Accepted Answer

To find the interest rate implied, set the present value of the initial investment equal to the present value of the cash inflow.
 
$1,560 × 1.00 = $12,000 × (discount rate)
discount rate = 0.130
This discount rate matches the one for an internal rate of return of 12%.

Elizabeth Myers Invested in a Project That Required an Initial