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which of the following is the approximate internal rate of return for an investment that costs $45,880 and has net cash flows of $4,000 for 20 years? present value of 1 rate periods 5% 6% 8% 10% 20 0.3769 0.3118 0.2145 0.1486 present value of an annuity of 1 rate periods 5% 6% 8% 10% 20 12.4622 11.4699 9.8181 8.5136 multiple choice question. 10% 8% 5% 6%

Respuesta :

The approximate internal rate of return for an investment that costs $45,880 and has net cash flows of $4,000 for 20 years is 6%.

What Is Internal Rate of Return (IRR)?

Generally speaking, an investment is more desirable to make the greater the internal rate of return. Because IRR is the same for all sorts of investments, it may be used to rate a variety of potential investments or projects fairly evenly. When comparing options with other similar features, the investment with the highest IRR would often be thought of as the best.

How to Calculate IRR?

To find the discount rate, or IRR, one would use the formula, setting NPV equal to zero.

Because of the nature of the formula and the difficulty of doing an analytical calculation, IRR must be determined iteratively by trial and error or by employing software intended to calculate IRR (e.g., using Excel).

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