IRR

The ABC Company Ltd plans to create a business. There are two potential business options namely business D and E. Data pertaining to investment requirements and payoffs is given in the table below. All financial data are in Tshs. Item First cost Option D 50M OptionE 40M Annual maintenance|2M and to increase by 200,000 from year 2 2 M between year 5 and ye ar costs Salvage value Life span - years and thereafter 15M 20 10M 20 10M Annual revenue Which option is worth pursuing? Use an internal rate of return method