An Investment Carrying a Current Cost of $120,000 Is Going

Multiple Choice

An investment carrying a current cost of $120,000 is going to generate $50,000 of revenue for each of the next three years. To calculate the internal rate of return we need to:

A) calculate the present value of each of the $50,000 payments and multiply these and set this equal to $120,000.
B) find the interest rate at which the present value of $150,000 for three years from now equals $120,000.
C) find the interest rate at which the sum of the present values of $50,000 for each of the next three years equals $120,000.
D) subtract $120,000 from $150,000 and set this difference equal to the interest rate.