Suppose an Investor Is Interested in Purchasing the Following Income

Multiple Choice

Suppose an investor is interested in purchasing the following income producing property at a current market price of $2,500,000. The prospective buyer has estimated the expected cash flows over the next four years to be as follows: Year 1 = $100,000, Year 2 = $150,000, Year 3 = $200,000, Year 4 = $250,000. If the estimated proceeds from selling the property at the end of year four is $3,000,000, what is the internal rate of return (IRR) of the project?

A) -33.93%
B) 5.72%
C) 8.99%
D) 10.99%