Your father LeBron paid $230,000 for an investment that promises to pay $4,500 at the end of each of the next 5 years, then an additional lump sum payment of $25,500 at the end of the 6th year. What is the expected rate of return (IRR) on this investment?
Solve without Excel.
Taking it as annuity and one final payment of (25,500 - 4,500) = $21,000
Calculating Interest Rate,
Using TVM Calculation,
I = [PV = -230,000, PMT = 4,500, FV = 21,000, N = 6]
I = 26.87%
Your father LeBron paid $230,000 for an investment that promises to pay $4,500 at the end...
Your father LeBron paid $230,000 for an investment that promises to pay $4,500 at the end of each of the next 5 years, then an additional lump sum payment of $25,500 at the end of the 6th year. What is the expected rate of return (IRR) on this investment? Solve without Excel, please include equations and steps.
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