The Dallas Development Corporation is considering the purchase of an apartment project for $100,000. They estimate that they will receive $15,000 at the end of each year for the next 10 years.
At the end of the 10th year, the apartment project will be worth nothing. If Dallas purchases the project, what will be its internal rate of return, compounded annually?
If the company insists on an 8 percent return compounded annually on its investment, is this a good investment?