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Buzz Lightyear has been offered an investment in which he expects to receive payments of $4,000 at the end of each of the next 10 years in return for an initial investment of $10,000 now. a. What is the
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43 votes
Buzz Lightyear has been offered an investment in which he expects to receive payments of $4,000 at the end of each of the next 10 years in return for an initial investment of $10,000 now. a. What is the IRR of the proposed investment

User Gaurav Mall
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1 Answer

15 votes
15 votes

Answer:

IRR= 21.86%

Step-by-step explanation:

Giving the following information:

Initial investment (PV)= $10,000

Cash flows (PMT)= $4,000 per year

Number or years (n)= 4

It is extremely difficult to calculate the IRR using the formula. We will use the financial calculator.

Function: CMPD

n= 4

I%= SOLVE = 21.86%

PV= 10,000

PMT= -4,000

IRR= 21.86%

User Wsj
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