Copyright

The Robertson Firm is considering a project which costs $123,900 to undertake. The project will...

Question:

The Robertson Firm is considering a project which costs $123,900 to undertake. The project will yield cash flows of $4,894.35 monthly for 30 months. What is the rate of return on this project? a. 12.53% b. 13.44% c. 13.59% d. 14.02% e. 14.59%

Internal Rate of Return:

Internal rate of return is a measure of a project's profitability. It is equivalent to the discount rate at which the net present value of the project is zero. Therefore the internal rate of return is also the break-even rate of return on the project. A project is acceptable only if the internal rate of return is higher than the required rate of return.

Answer and Explanation:

The answer is C.

Suppose the internal monthly rate of return on the project is R. This is the rate at which the net present value of the project is...

See full answer below.

Become a Study.com member to unlock this answer! Create your account

View this answer

Learn more about this topic:

Loading...
Internal Rate of Return Method: Definition & Calculation

from Accounting 301: Applied Managerial Accounting

Chapter 14 / Lesson 7
2.9K

Related to this Question

Explore our homework questions and answers library