A project requires an initial cash outflow of $80,000. The investment is expected to produce net cash inflows of $15,000 each year for eight years. The internal rate of return on this investment
To the nearest tenth of a percent is
A)6.7%.
B)10.0%.
C)18.8%.
D)50.0%.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of the cash flows from the investment equal to zero. Using the IRR formula or financial calculator, the IRR for this series of cash flows is approximately 10.0%.

A Project Requires an Initial Cash Outflow of $80,000