Final answer:
The maximum possible real IRR for the project would occur if the full amount of cash flows was received immediately in the first year. It is the interest rate that makes the present value of cash flows equal to the initial investment at the point where cumulative cash flows become positive for the first time.
Step-by-step explanation:
The question is asking to determine the maximum possible value that any of the real Internal Rate of Return (IRR) could have for a five-year project with an investment of -165 and given cash flows over the years. To find the maximum possible IRR, we need to identify the year in which the project's cumulative cash flows first become positive. The maximum IRR would be the interest rate that would make the present value of the cash flows exactly equal to the initial investment at that point. While the question states not to calculate the IRR directly, we can logically deduce that the maximum IRR occurs when the investment is recovered as quickly as possible. Therefore, without calculation, we consider what would happen if all cash flows were received immediately, which enables us to conceive an IRR greater than any possible by receiving cash flows over time. Given this, the maximum possible IRR would occur if the total cash flow was received in the first year. The IRR will always be less than or equal to the highest year-over-year growth in the project's net cash flow.
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