An investment is expected to generate net operating cash inflows of $25,000 per year for each of the next 5 years. If the initial amount invested is $101,000, which of the following is closest to the internal rate of return? 24.8% 6.5% 4.0% 7.5%

An investment is expected to generate net operating cash inflows of $25,000 per year for each of the next 5 years. If the initial amount invested is $101,000, which of the following is closest to the internal rate of return? 24.8% 6.5% 4.0% 7.5%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 28P

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Question

An investment is expected to generate net operating cash inflows of $25,000 per year for each

of the next 5 years. If the initial amount invested is $101,000, which of the following is closest to

the internal rate of return?

24.8%

6.5%

4.0%

7.5%

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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