Question

What would be the irr for an investor that makes a $130,000 investment in year 0, and then receives $30,000 per year each of the next eight years? round to 2 decimal places.

Answer 1

The IRR for the investor making a $130,000 investment in year 0 and receiving $30,000 per year for the next eight years is approximately 12.43%.

Step-by-step explanation:

The IRR (Internal Rate of Return) is a financial metric used to calculate the profitability of an investment. In this case, the investor makes a $130,000 investment in year 0 and receives $30,000 per year for the next eight years. To calculate the IRR, we need to find the discount rate that equates the present value of the cash flows to the initial investment.

We can use a financial calculator or spreadsheet software to solve for the IRR. In this case, the IRR is approximately 12.43%.