(LO 9-3) Arkansas Best Freightways is considering a purchase of three different potential trucks but is uncertain of the cash inflows associated with the following investment scenarios.

Required:
1. Use the Excel IRR() function to calculate the internal rate of return for each of the three possible investments (to two decimal places).
2. Which investment has the highest IRR (internal rate of return)?
3. What are some nonfinancial considerations that should be made regarding which investment will be chosen?

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Year Year 0 (today) Year 1 Buy New Truck Increased Profits Investment 1 Investment 2 Investment 3 (85,000) (105,000) (125,000) 25,000 20,000 40,000 Year 2 Increased Profits 25,000 30,000 30,000 Year 3 Increased Profits 25,000 40,000 20,000 Year 4 Increased Profits 25,000 50,000 10,000