A two-year investment of $2,000 results in a return of $150 at the end of the first year and a return of $150 at the end of the second year, in addition to the return of the original investment. The internal rate of return on the investment is:
d. None of the above
The internal rate of return (IRR) of an investment is the discount rate that causes the present value of the cash flows generated by the investment to be equal to the amount of the investment.
A computation and guidance is provided to help you learn this process.