Question

1. (Multiple Choice: 5 points) An investment of $50,000 now returns an annual profit of $5,500 for the next 30 years. Additionally, upon maturity (at year 30), the investor receives $6,000. Which of the following equations, when solved, gives the IRR for this investment? (Circle the correct option.) a) –$44,000(A|P i*, 30) + $5,500 – $6,000 x i* b) -$44,000(F|P i*, 30) + $5,500(A|P i*, 30) – $6,000 x i* c) -$44,000(A|P *, 30) + $6000 + $5,000(F|P i*, 30) d) -$44,000(A|F i*, 30) + $11,500(A|F i*, 30) e) None of the above

Answer 1

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solution

the correct option is e) None of the above

IRR=s Cash flow -- Eltron - Intial Inuestment . SWI - mihal truestment. Iltra = $500 oo - 50000 + 6000 (lton = - 44000 + 5500 (Plfiling 5500 6000 P- 50,000 n=30