The internal rate of return of the investment is closest to:

A) 16%
B) 18%
C) 20%
D) 22%

Question

The internal rate of return of the investment is closest to:A) 16%B) 18%C) 20%D) 22%

Courtney Dawson · Accepted Answer

Final Answer : B, Explanation :  Factor of the internal rate of return = Investment required ÷ Annual net cash inflow= $30,000 ÷ $6,000 = 5This is closest to the present value of an annuity over 15 years at 18%.Therefore the internal rate of return is closest to 18%.Reference: CH12-Ref3(Ignore income taxes in this problem.)Oriental Corporation has gathered the following data on a proposed investment project:   The company uses straight-line depreciation on all equipment.Assume cash flows occur uniformly throughout a year except for the initial investment.

The internal rate of return of the investment is closest to:

A) 16%
B) 18%
C) 20%
D) 22%

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