Solution a:
PV factor at IRR for first investment = Initial investment / Annual cash inflows = $7,775.59 / 2600 = 2.9906
Refer PV factor table at period 5, this factor falls at IRR = 20%
PV factor at IRR for 2nd investment = Initial investment / Annual cash inflows = $13,248.51 / 4000 = 3.3121
Refer PV factor table at period 4, this factor falls at IRR = 8%
solution b:
V&K should selection first investment as it is having higher IRR.
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