Answer:
IRR for truck = 10.68%
IRR for pulley = 25.41%
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator:
Cash flow for the truck :
Cash flow in year 0 = $-19,000
Cash flow each year from year 1 to 5 = 5,100
IRR = 10.68%
Cash flow for the pulley :
Cash flow in year 0 = $-20,000
Cash flow each year from year one to five = $7,500
IRR = 25.41%
To find the IRR using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
I hope my answer helps you
