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Investment is selling for $903.10 and promises to make the following annual payments: Years from Now Promised Annual Payments (Cash Flow to Investor) 1 $100

Investment is selling for $903.10 and promises to make the following annual payments:

Years from

Now

Promised Annual Payments

(Cash Flow to Investor)

1

$100

2

$100

3

$100

4

$1,000

A) What is this investments internal rate of return?

(b) What is one caveat or implicit assumption we make when using an IRR?

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