Answered: An investment of $81,000 yields a net…

An investment of $81,000 yields a net annual income of $17,000 for 6 years. What is the internal rate of return (IRR) for this investment? O a. 8.77% O b. 10.52% O c.4.67% O d. 7.01% O e. 5.61%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 8P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

An investment of $81,000 yields a net annual income of $17,000 for 6 years. What is the internal
rate of return (IRR) for this investment?
O a. 8.77%
O b. 10.52%
O c. 4.67%
O d. 7.01%
O e. 5.61%

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