McClellan Cement is evaluating purchasing a line of cement mixing trucks. McClellan can either purchase new trucks that will produce $90,000 per year for seven years, or used trucks that will produce $60,000 per year for seven years. The new trucks cost $600,000 and can be sold at the end of seven years for $280,000. The used trucks cost $275,000 and will have no value at the end of seven years. Which project has the higher IRR? If the cost of capital is 5%, which project has the higher NPV? Which project should McClellan choose?

Answer: Used (11.87% vs. 9.25%); New ($119,764.38 vs. $72,182.40); choose new trucks, IRR cannot choose between mutually exclusive projects

Please show how the answer was calculated