Assume that you purchase a property for $500,000 and it generates annual cash flows of $30,000 in Years 1-3; and $75,000 in Years 4 & 5. You are able to sell it at the end of Year 5 for $600,000. Calculate the IRR for this investment property.

Assume that you purchase a property for $500,000 and it generates annual cash flows of $30,000 in Years 1-3; and $75,000 in Years 4 & 5. You are able to sell it at the end of Year 5 for $600,000. Calculate the IRR for this investment property.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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