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XYZ Ltd. is considering two projects, Project X and Project Y, both requiring an initial investment of GBP 70,000. The projects have the following cash

XYZ Ltd. is considering two projects, Project X and Project Y, both requiring an initial investment of GBP 70,000. The projects have the following cash flows:

Year

Cash Flows (Project X)

Cash Flows (Project Y)

Initial Investment

(70,000)

(70,000)

1

25,000

20,000

2

20,000

15,000

3

15,000

25,000

4

10,000

20,000

a. Compute the Internal Rate of Return (IRR) for each project.

b. Which project should be selected based on the IRR method if the company's required rate of return is 8%?

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