Question

compute the internal rate of return for the cash flows of the following two projects (Do...

compute the internal rate of return for the cash flows of the following two projects (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.):

year project A PROJECT B
0 -6800 -4400
1 2600 1500
2 3400 2900
3 2200 1800
Business   Accounting   
0 0
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Answer #1

IRR is calculated using IRR function in excel.

year project A PROJECT B
0 -6800 -4400
1 2600 1500
2 3400 2900
3 2200 1800
IRR 10.23% 18.68%

At this Rate NPV is $0.

year project A Discount rate Present value PROJECT B Discount rate Present value
0 -6800 1 -6800 -4400 1 (4,400.00)
1 2600 0.90723097 2358.80052 1500 0.84264    1,263.95
2 3400 0.82306803 2798.43131 2900 0.71004    2,059.10
3 2200 0.74671281 1642.76818 1800 0.5983    1,076.94
NPV 0.00              -  
0 0
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