Problem:
Year........ Undiscounted free cash flows
0..............(380,000)
1...............20,000
2...............30,000
3...............200,000
4...............175,000
5...............130,000
6................145,000
Required rate of return = 15%
Question: The internal rate of return is closest to which of the following answers?
a. 20.50%
b. 18.20%
c. 16.45%
d. 14.25%
e. none of the above are within 1% of the correct answer. (Please provide the correct answer.)