Clement plc is evaluating three investment projects, whose expected cash flows were given in Table 6.4. Calculate the internal rate of return for each project. If Clement’s cost of capital is 10 per cent, which project should be selected?

 

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Table 6.4 Three investment projects with different cash-flow profiles to illustrate calculating net present value Period 0 1 23 4 5 69 7 Clement plc: cash flows of proposed investment projects Project A (£000) (5,000) 1,100 1,100 1,100 1,100 1,100 1,100 1,100 Project B (£000) (5,000) 800 900 1,200 1,400 1,600 1,300 1,100 Project C (£000) (5,000) 2,000 2,000 2,000 100 100 100 100