Amatra Inc., has the opportunity to invest in new equipment that will cost $113,000.The net cash inflows for ten years equal $20,000 per year.What is the internal rate of return for the investment? A partial table of the present value of an annuity of $1 in arrears is as follows:

Question

Quizplus · Accepted Answer

Discount factor = $113,000 / $20,000 = 5.650
This discount factor matches the one for an internal rate of return of 12%.