What are the internal rates of return on projects A and B?

Question

472 viewsNovember 24, 2016

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Darshita 6.14K November 24, 2016 0 Comments

The following are the cash flows of two projects:

What are the internal rates of return on projects A and B? (Enter your answers as a percent rounded to 2 decimal places.)

score 0 · Answer 1 · 2016-11-24T07:07:53+00:00

we have been provided with the cash flow of the two project and we need to calculate IRR.

Calculation of the IRR ( internal rates of return) of project -A is as follow

IRR = -250 +130/ (1+r)1+130/ (1+r)02+130/ (1+r)3+130/ (1+r)4

Solving this equation by trial and error method you will get

IRR=0.3741

IRR= 37.41%

Calculation of the IRR ( internal rates of return) of project -B is as follow

IRR = -250 +150/ (1+r)1+150/ (1+r)02+150/ (1+r)3

Solving this equation by trial and error method you will get

IRR=0.3630

IRR= 36.30%

Project
IRR

Project-A
37.41%

Project-B
36.30%

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