Determine the internal rate of return of the following investment Period Cash Flow 0 (9,120) 1 &nb

Question

Question

Determine the internal rate of return of the following investment

Period Cash Flow

0 (9,120)

1 1000

2 5000

3 10000

business finance

Answer 1

Answer #1

Let irr be x%
At irr,present value of inflows=present value of outflows.

9120=1000/1.0x+5000/1.0x^2+10000/1.0x3

Hence x=irr=25%

Answer 2

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