Project A

Years 0 1 2 3
Initial Investment $ (400,000.00)
Annual Cash Inflows $ 126,000.00 $ 126,000.00 $ 126,000.00
Pv Factor @ 8% 1 0.92592592593 0.8573388203 0.79383224102
Present Values of Cash Flows $ (400,000.00) $ 116,666.67 $ 108,024.69 $ 100,022.86
Net Present Value (NPV) $ 17,327.98
Internal Rate of Return (IRR) 9.931039%

Project B
Years 0 1 2 3
Initial Investment $ (160,000.00)
Annual Cash Inflows $ 52,800.00 $ 52,800.00 $ 52,800.00
Pv Factor @ 8% 1 0.92592592593 0.8573388203 0.79383224102
Present Values of Cash Flows $ (160,000.00) $ 48,888.89 $ 45,267.49 $ 41,914.34
Net Present Value (NPV) $ 14,880.30
Internal Rate of Return (IRR) 12.110361%
 4

$ 126,000.00
0.7350298528
$ 92,613.76

$ 52,800.00
0.7350298528
$ 38,809.58