Compute the internal rate of return for the cash flows of th

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

–$

5,800

–$

3,400

1

2,200

1,300

2

3,000

2,100

3

1,800

1,400

Internal rate of return

Project A

%

Project B

%

Solution

IRR calculation of Project A (assumed r is 10 %

so by calculation IRR will be in 10.32%

IRR calculation of Project A (assumed r is 19 %

so by calculation IRR will be in 19.11%