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Internal Rate of Return (IRR)

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Billy and Mandy Jones have $25,000 to invest. On average, they do not make any investment that will not return at least 7.5% per year. They have been approached with an investment opportunity that requires $25,000 upfront and has a payout of $6,000 at the end of each of the next 5 years. Using the internal rate of return (IRR) method and their requirements, determine whether Billy and Mandy should undertake the investment.

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Solution Summary

The solution provides step-by-step method for the calculation of internal rate of return (IRR) and determining whether to undertake an investment based on IRR method. Formula for the calculation and Interpretations of the results are also included.

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