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Net Present Value / IRR
John is considering the purchase of a lot. He can buy the lot today and expects the price to rise to $15,000 at the end of 10 years. He believes that he should earn an investment yield of 10 percent annually on this investment. The asking price for the lot is $7,000. Should he buy it? What is the annual yield (internal rate of return) of the investment if John purchases the property for $7,000 and is able to sell it 10 years later for $15,000?
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