Calculate the internal rate of return

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Question - A&B Enterprises is trying to select the best investment from two alternatives. Cash flows for each alternative are:

Initial outlay $102,000 $102,000

Year Investment A Investment B

1 $11,000 $58,000

2 $21,000 $50,000

3 $25,000 $32,000

4 $75,000 0

5 $71,000 0

Required - For each of the investments, calculate the following (use a 10% discount rate):

(a) Payback period

(b) Internal rate of return

(c) For each method individually, which is the better investment?

Reference no: EM132763666

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