Assume That an Industrial Building Can Be Purchased for $1,500,000

question 26

Multiple Choice

Assume that an industrial building can be purchased for $1,500,000 today, is expected to yield cash flows of $80,000 for each of the next five years (with the cash flows occurring at the end of each year) , and can be sold at the end of the fifth year for $1,625,000. Calculate the internal rate of return (IRR) for this transaction.

• A) 3.14%
• B) 6.78%
• C) 9.20%
• D) 10.37%