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# Internal Rate of Return Methodss

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Julie Kowalis, an investment analyst, wants to know if her investments during the past four years have earned at least a 12% return. Four years ago, she had the following investments:

a. She purchased a small building for \$50,000 and rented space in it. She received rental income of \$8,000 for each of the four years and then sold the building this year for \$55,000.

b. She purchased a small refreshment stand near the city park for \$25,000. Annual income from the stand was \$5,000 for each of the four years. She sold the stand for \$20,000 this year.

c. She purchased an antique car for \$5,000 four years ago. She sold it this year to a collector for \$7,000.

Required:
1. Using the net present value method, determine whether or not each investment earned at least 12%.

2. Did the investments as a whole earn at least 12%? Explain.

##### Solution Summary

Julie Kowalis, an investment analyst, wants to know if her investments during the past four years have earned at least a 12% return. Four years ago, she had the following investments:

##### Solution Preview

Please find the full analysis on the attached Excel sheet. I have also calculated the IRR for each investment as well as the cumulative IRR.

Julie Kowalis, an investment analyst, wants to know if her investments during the past four years have earned at least a 12% return. Four years ago, she had the following investments: ...

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• BA, Ain Shams University, Cairo Egypt
• MBA, California State University, Sacramento
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