In using the internal rate of return method, the internal rate of return factor was 4.0 and the equal annual cash inflows were $18,000. The initial investment in the project must have been
A) $18,000.
B) $4,500.
C) $72,000.
D) $36,000.

Question

Quizplus · Accepted Answer

Using the formula for internal rate of return, we can determine the initial investment:
4.0 = (18,000 / I) + 1
4.0I = 18,000
I = 4,500
Therefore, the initial investment must have been $4,500.

In Using the Internal Rate of Return Method, the Internal