Question

You invest $7,873 in stock and receive $102, $123, $121, and $155 in dividends over the following 4 years. At the end of the 4 years, you sell the stock for $11.900. What was the IRR on this investment? The IRR on this investment is ______%.

Answer 1

12.23%

Step-by-step explanation:

Using an Excel spreadsheet we can determine the internal rate of return by using the IRR function:

inputs

-7873

102

123

121

155 + 11900 = 12055

IRR = 12.23%

You can also use a financial calculator, or do it by hand. Doing by hand is simply too much work for something that can be solved in a few seconds.