Internal rate of return: Refer to problem 10.5. Compute the IRR for both production system 1 and production system 2. Which hasa the higher IRR? Which production system has the higher NPV? Explain why the IRR and NPV rankings of systems 1 and 2 are different.

Net present Value: Blanda Incorporated mangement is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a 9 percent discount rate for their production systems, in which system should the firm invest?

Year	System 1	System 2
0	-13,600	-42,000
1	13,600	30,700
2	13,600	30,700
3	13,600	30,700