Chapter 26, Problem 26.4DIE

(a)

To determine

Internal rate of return:

Internal return rate (IRR) can be defined as a tool that helps in the process of capital budgeting to estimate the profitability of all potential investments. The internal rate is the discount rate that makes the net present value of the cash flows from a project equivalent to zero.

The net present value on the project and decide whether it must be accepted.

(b)

To determine

The internal rate of return and decide whether the project must be accepted.