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 as 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%
