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%

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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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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