Final answer:
The IRR for the given cash flows is the discount rate that equates the NPV of all cash flows to zero; it requires iterative calculations that can be performed using financial tools.
Step-by-step explanation:
To calculate the Internal Rate of Return (IRR) for the given cash flows - $100,000 outflow in Year 0, and inflows of $55,000 in Year 1, $50,000 in Year 2, and $30,000 in Year 3 - one must use a financial calculator or software capable of iterative calculations, since the IRR equation cannot be solved algebraically. The IRR is the discount rate that makes the net present value (NPV) of all cash flows equal to zero. For this example, one would set up the equation as follows: 0 = (-$100,000) + ($55,000 / (1 + IRR)) + ($50,000 / (1 + IRR)^2) + ($30,000 / (1 + IRR)^3), where IRR is the rate we're solving for.
Using examples of cash flows and present value calculations can help illustrate similar investment decisions, such as the valuation of bonds with known future value and payments from firm at different point in time.