Choice "A" is correct. Yes, No, Yes. Internal rate of return (IRR) determines the compound interest rate of an investment where the present value of the cash inflows equals the present value of the cash outflows. The IRR is the discount rate that results in a net present value of zero. To calculate the IRR: First calculate:
Net incremental investment (investment required)
Net annual cash flows | = | Factor of the IRR |
Second: locate the factor derived above to identify the rate of return it represents.Choices "c", "d", and "b" are incorrect, per above.
