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What the internal rate of return or irr is

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Reference no: EM133010829

A company is considering a 5-year project.  It plans to invest $60,000 now and it forecasts net cash flows for each year of $16,000. The company requires a hurdle rate of 12%. Selected factors for the present value of an annuity of $1 for 5 years are shown below:

Interest Rate                                                             Present Value of an Annuity of $1 for 5 Years

10%..................................................................3.7908
12%...................................................................3.6048
14%..................................................................3.3522

Problem 1: The internal rate of return (IRR) is:

Select one or more:

a. Lower than 10%.

b. Slightly higher than 10%.

c. Slightly lower than 12%.

d. Slightly higher than 12%.

e. Higher than 14%.

Reference no: EM133010829

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