What Is the IRR for the Following Net Annual Cash

question 42

Multiple Choice

What is the IRR for the following net annual cash flows today -$45 000, Year 1 + $12 000, Year 2 + $37 000, Year 3 + $12 000, Year 4 + $17 000?

• A) 26.722%
• B) 16.722%
• C) 6.722%
• D) 36.722%
• E) 46.722%

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Definitions:

Lump Sum

A single payment made at a particular time, as opposed to multiple payments over time.

Sub-Contracting

The process of outsourcing specific portions of a project or job to specialized third parties while retaining overall responsibility for completion.

Discount Rate

Employed in discounted cash flow analysis, this interest rate is used for determining the current value of cash flows that will be received in the future.

Annual Payments

Regular payments made once a year, often associated with loan repayments or insurance premiums.