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:

Emerging Innovations

New developments or technologies that are on the verge of becoming widely known or used.

Creative Potential

The inherent capacity or possibility within a person to think creatively or come up with new and innovative ideas.

Sunk-cost Fallacy

The misconception of valuing ongoing investments based on previously spent resources rather than future benefits, often leading to irrational decision-making.

Development

The process of growth, progress, or evolution, often involving improvement in abilities, knowledge, or understanding.