Question

You buy a new piece of equipment for $30,978, and you receive a cash inflow of $3,900 per year for 12 years. Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Answer 1

x = 7%

Step-by-step explanation:

given data:

price of equipment is given as $30 978

cash inflow is given a $3900/ year for a period of 12 years

Let internal rate of return is x %

we know , at IRR, inflow value of PV = outflow value of PV

`30978 = (3900)/(1 * x) + (3900)/(1 * x^2) + (3900)/(1 * x^3) +....+ (3900)/(1 * x^(12))`

from using financial calculator x value will be

x = 7%