We have:
Initial cost (PV) = 63800
Annual cash flow (Pmt) = 16580
N = 6
Since the cash flows are conventional in nature, we can use the following formula to calculate the IRR:
PV = Pmt x PVIFA(N, R)
63800 = 16,580 x PVIFA (6, R)
PVIFA (6, R) = 3.84800965
Solving for R using PV of annuity table, we get R= 9.4162%
Therefore, Internal rate of return would be 9.4162%.
