Vargas Products is trying to decide which of the following projects to invest in: times Project A costs=$280,000 and offers eight annual net cash inflows of $56,000. Project B costs $380,000 and offers nine annual net cash inflows of $74,000.

First, compute the IRR of each project.

The IRR for Project A is

between 14% and 16%

between 12% and 14%

between 10% and 12%

between 16% and 18%

.

The IRR for Project B is

between 12% and 14%

between 16% and 18%

between 10% and 12%

between 14% and 16%

.

Neither project

Project B

Project A

is better because the IRR

is higher

is lower

is not significantly different

.