Explain the following terms: (i) (ii) Internal Rate of Return (IRR) Net Present Value (NPV) (2+2...

 

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Explain the following terms: (i) (ii) Internal Rate of Return (IRR) Net Present Value (NPV) (2+2 = 4 marks) A family purchased a run-down house for $120,000 with the idea of making major improvements and then selling for a profit. In the first year that they owned the house, they spent $18,000 on improvements. They spent $15,000 the second year and $9,000 the third year. In addition, they paid property taxes of $700 per year for 3 years and then sold the house for $250,000. What internal rate of return did they make on their investment? Explain the following terms: (i) (ii) Internal Rate of Return (IRR) Net Present Value (NPV) (2+2 = 4 marks) A family purchased a run-down house for $120,000 with the idea of making major improvements and then selling for a profit. In the first year that they owned the house, they spent $18,000 on improvements. They spent $15,000 the second year and $9,000 the third year. In addition, they paid property taxes of $700 per year for 3 years and then sold the house for $250,000. What internal rate of return did they make on their investment?

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IRR IRR is internal rate of return or discount rate at which the fu... View the full answer