What Is the Internal Rate of Return on an Investment

question 59

Multiple Choice

What is the internal rate of return on an investment with the following cash flows? $$\begin{array} { c c } \underline{\text { Year }} & \underline{\text { Cash Flow }} \\0 & - \$ 123,400 \\1&\$ 36,200 \\2 & \$ 54,800 \\3 & \$ 48,100\end{array}$$

• A)5.93%
• B)5.96%
• C)6.04%
• D)6.09%
• E)6.13%

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Definitions:

Negative Externalities

Costs suffered by a third party due to an economic transaction that they were not a part of, often leading to market failure.

Human Safety

The condition of being protected from or unlikely to cause danger, risk, or injury to individuals.

Regulatory Capture

A theory that regulatory agencies may come to be dominated by the interests they're supposed to regulate, rather than serve the public interest.

Deregulation

The reduction or elimination of government power in a particular industry, usually with the aim of increasing competition and efficiency.