Answer:
Explanation:
Internal rate of return (IRR ) is the rate at which the Net present value of a project equal to zero.
Depreciation per year = 70,000/15 = 4,666.67
Annual net cashflow = 12,500 -2,500 - 4,666.67 = 5,333.33
You can use financial calculator to solve for IRR with these inputs;
Initial investment; CF0 = -70,000
Recurring cashflows; C01 = 5,333.33
Frequency; F01 = 15
then use IRR function and key in CPT = 1.718%
Therefore, the Internal rate of return = 1.72%