**Problem Statement:**Compute the Internal Rate of Return (IRR) for the investment represented by the following cash flow table:| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 ||------|-------|------|------|------|------|------|------|------|| Cash Flow (in $1000's) | -1200 | +350 | +300 | +250 | +200 | +150 | +100 | +50 |**Table Explanation:**- **Year 0:** An initial investment of $1,200,000 is made, represented as -1200 (in thousands of dollars).- **Year 1 to Year 7:** The project yields positive cash flows, decreasing each year from $350,000 in Year 1 to $50,000 in Year 7.This information is used to calculate the IRR, which is the discount rate that makes the net present value (NPV) of the cash flows equal to zero.

A discount rate at which the net present worth of an investment is equal to zero is term as an…

Answered: 2. Compute the IRR for the investment…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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2. Compute the IRR for the investment represented by the following cash flow table: Year 0. 1 3 4 6. Cash Flow -1200 +350 +300 +250 +200 +150 +100 +50 (in $1000's)