What is the internal rate of return for a $55,000 investment (−$55,000 in year zero) and cash inflows of $20,000 per year for years 1 through 4?
A) 16.88%
B) −16.88%
C) 45.4%
D) −45.4%

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. In this case, the IRR is a positive 16.88%, indicating a profitable investment. Negative rates would indicate a loss, and the given cash flows do not suggest a loss, hence option A is correct.

What Is the Internal Rate of Return for a $55,000