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Calculate the investment irr

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Question - Jeff Bezos is evaluating an investment opportunity. He is comfortable with the investment's level of risk. Based on competing investment opportunities, he feels that this investment must earn a minimum compound annual after-tax return of 9% to be acceptable. Jeff's initial investment would be $7,500, and he expects to receive annual after-tax cash flows of $500 per year in each of the first 4 years, followed by $700 per year at the end of years 5 through 8. He plans to sell the investment at the end of year 8 and net $9,000, after taxes.

Required -

Calculate the investment's IRR (compound annual return)?

Will Jeff accept the project? Why?

Reference no: EM132784084

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