Maddin

Rather than just lear the "trick", here's the intuition behind the problem:

The IRR is the discount rate that results in an NPV of zero. So, since the cash inflows are a perpetuity,

NPV = -25,000 + 5,000/i

set NPV to zero and solve for i: 0 = 5.000/- - 25,000 ==> i=0.20