Zellars,Inc.is considering two mutually exclusive projects,A and B.Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two.Project B costs $120,000 and is expected to generate $64,000 in year one,$67,000 in year two,$56,000 in year three,and $45,000 in year four.Zellars,Inc.'s required rate of return for these projects is 10%.The internal rate of return for Project B is
A) 29.74%.
B) 30.79%.
C) 35.27%.
D) 36.77%.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) for Project B is calculated by finding the discount rate that makes the net present value (NPV) of the project's cash flows equal to zero. Given the cash flows and the cost of Project B, the IRR is approximately 35.27%.