Mint Company is contemplating an investment costing $135,000. The investment will have a life of 8...
Mint Company is contemplating an investment costing $135,000. The investment will have a life of 8 years with no salvage value and will produce annual cash flows of $25,305. Instructions What is the approximate internal rate of return associated with this investment?
Homework Answers
Let irr be x%
At irr,present value of inflows=present value of outflows.
135000=25305/1.0x+25305/1.0x^2+..............+25305/1.0x^8
Hence x=irr=10%(Approx).
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