Practice problem A project requires $100,000 in initial investment and immediately pays $25,000. The next year this project requires additional…

Practice problem

A project requires $100,000 in initial investment and immediately pays $25,000. The next year this project requires additional investment of $50,000 and does not pay anything. In two year the project pays $150,000. The internal rate of return (i) for this project can be obtained by

a) using a present worth factor.

b) solving the ith degree polynomial equation.

c) solving a quadratic equation.

d) calculating an external rate of return.

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