An Investment of $185,575 Is Expected to Generate Returns of $65,000

question 81

Short Answer

An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next 4- years. What is the investment's internal rate of return?
Below is a table for the present value of $1 at compound interest. $\begin{array}{lllll}\text { Year }&6\%&10\%&12\%&15\%\\\hline1 & 0.943 & 0.909 & 0.893 & 0.870 \\2 & 0.890 & 0.826 & 0.797 & 0.756 \\3 & 0.840 & 0.751 & 0.712 & 0.658 \\4 & 0.792 & 0.683 & 0.636 & 0.572 \\5 & 0.747 & 0.621 & 0.567 & 0.497\end{array}$ Below is a table for the present value of an annuity of $1 at compound interest. $\begin{array}{lllll}\text { Year }&6\%&10\%&12\%&15\%\\\hline1 & 0.943 & 0.909 & 0.893 & 0.870 \\2 & 1.833 & 1.736 & 1.690 & 1.626 \\3 & 2.673 & 2.487 & 2.402 & 2.283 \\4 & 3.465 & 3.170 & 3.037 & 2.855 \\5 & 4.212 & 3.791 & 3.605 & 3.353\end{array}$

---

Definitions:

Average

A statistical measure representing the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.

Scatterplot

A type of graph used in statistics to display values for typically two variables for a set of data, showing the relationship between them.

Perfect Correlation

A statistical measure indicating that two variables move in unison, either directly (1.0) or inversely (-1.0) without any deviation.

Fall

The action or process of moving downwards under the force of gravity.