To virtually everyones surprise, the new Washington Nationals baseball team earned a pre-tax profit of $20 million

Question:

To virtually everyone’s surprise, the new Washington Nationals baseball team earned a pre-tax profit of $20 million in 2005, compared to a $10 million loss when the team was the Montreal Expos in 2004 (Thomas Heath, “Nationals’ Expected ’05 Profit Is $20 Million,” Washington Post, June 21, 2005, A1). Major League Baseball, which bought the franchise for $120 million in 2002, sold the team for $450 million in 2006 (http:// washington.nationals.mlb.com). If the Nationals are expected to earn $20 million each year in the future, what is the internal rate of return on a $400 million investment for this club?

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...