Determine the incremental rate of return between Company B and Company C

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Answer:

IRR = 9.50%

Working notes for the above answer is as under

We have to determine the rate of return between company B and company C asĀ  follow

 

We have to find IRR by incremental Amount between both the project

Year
0 -100
1 -15
2 -15
3 -15
4 -15
5 -265
6 100
7 100
8 100
9 100
10 280

Now

Irr

= -100-15(1+r)1-15/(1+r)2-15/(1+r)3-15/(1+r)4-265/ (1+r)5+100/ (1+r)6+100/ (1+r)7+100/(1+r)8+100/(1+r)9+280/(1+r)10

Solving this equation by trial and error method we will get

IRR = 9.50%

 

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