Your father LeBron paid $230,000 for an investment that promises to pay $4,500 at the end...

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Your father LeBron paid $230,000 for an investment that promises to pay $4,500 at the end...

Your father LeBron paid $230,000 for an investment that promises to pay $4,500 at the end of each of the next 5 years, then an additional lump sum payment of $25,500 at the end of the 6th year. What is the expected rate of return (IRR) on this investment?

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Answer 1

Answer #1

Taking it as annuity and one final payment of (25,500 - 4,500) = $21,000

Calculating Interest Rate,

Using TVM Calculation,

I = [PV = -230,000, PMT = 4,500, FV = 21,000, N = 6]

I = 26.87%

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Answer 2

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