What Is the IRR for a Project That Costs $100,000

question 49

Multiple Choice

What is the IRR for a project that costs $100,000 and provides annual cash inflows of $30,000 for 6 years starting one year from today?

• A) 19.91%
• B) 16.67%
• C) 15.84%
• D) 22.09%

---

Definitions:

Straight-Line Method

The straight-line method is a depreciation technique that allocates an equal amount of depreciation each year over the useful life of an asset.

Accumulated Depreciation

The total depreciation of a tangible asset up to a specific date, reducing its book value.

Other Income/Expense

Gains or losses from non-operational activities, distinct from the core business operations’ revenues and expenses.

Gain

The profit realized from the sale of assets or investments for more than their original purchase price.