Net Present Value and Internal Rate of Return
Response to the following problem:
A real estate investment requires an initial outlay of $200,000 in cash. The investment will return a single sum cash payment of $438,490 after five years. The rate of return required on projects as risky as this one is 18%.
1. What is the net present value of this real estate investment?
2. What is the internal rate of return of this real estate investment?
3. Is this an attractive investment?