What Is the Internal Rate of Return (IRR) of an Investment

question 63

Multiple Choice

What is the internal rate of return (IRR) of an investment that requires an initial investment of $11,000 today and pays $15,400 in one year's time?

• A) 37%
• B) 44%
• C) 43%
• D) 40%

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Definitions:

Price Increase

Refers to a situation where the cost of goods or services rises over a period of time.

Total Utility Data

Information that represents the total satisfaction received from consuming a certain amount of goods or services.

Money Income

The total amount of monetary earnings or receipts accruing to an individual or household before taxes and other deductions.

Rational Consumer

An individual who makes purchase decisions that maximize their utility, given their budget constraints.