Given the Following Expected Cash Flow Stream, Determine the IRR

Multiple Choice

Given the following expected cash flow stream, determine the IRR of the proposed investment in an income producing property and determine whether or not the investment should be pursued using IRR as your decision making criteria. Investment Horizon: 5 years; Expected Yearly Cash Flow in each of the next five years: $127,628. Expected Sale Price at end of 5 years: $1,595,350; Required return on equity: 5%; Current Market Price of Property: $1,750,000

A) IRR is 4.92%; Decision is to invest
B) IRR is 4.92%; Decision is to not invest
C) IRR is 5.72%; Decision is to invest
D) IRR is 5.72%; Decision is to not invest