Suppose an Investor Is Interested in Purchasing the Following Income

question 29

Multiple Choice

Suppose an investor is interested in purchasing the following income producing property at a current market price of $2,500,000. The prospective buyer has estimated the expected cash flows over the next four years to be as follows: Year 1 = $100,000, Year 2 = $150,000, Year 3 = $200,000, Year 4 = $250,000. If the estimated proceeds from selling the property at the end of year four is $3,000,000, what is the internal rate of return (IRR) of the project?

• A) -33.93%
• B) 5.72%
• C) 8.99%
• D) 10.99%

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Definitions:

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The study of genes, genetic variation, and heredity in living organisms, influencing traits and characteristics.