Question: Suppose a certain property is expected to produce net operating cash flows annually, as follows, at the end of each of the next five years:

Suppose a certain property is expected to produce net operating cash flows annually, as follows, at the end of each of the next five years:

Year 1 = $50,000

Year 2 = $45,000

Year 3 = $50,000

Year 4 = $55,000

Year 5 = $65,000

In addition, at the end of the fifth year we will assume the property will (or at least could) be sold for $650,000. If the required rate of return on projects of similar risk is 14%, and you plan to invest $425,000 in the property:

What is the Internal Rate of Return offered by the project?

A. 19.89%

B. 19.09%

C. 19.77%

D. 19.37%

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