Actuarial Science: Annuities

Question

An actuary makes plans for a new business venture on 1/1/2010. The actuary plans to invest 80,000 immediately and 60,000 on 1/1/2011 to develop new software.

The project is anticipating returns of 25,000 in 1/1/2012 and increasing by 10% for each year up to and including 1/1/2017.

Find the IRR of the project if you assume there aren’t any cash flows after 1/1/2017.

Answer 1

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