Can I please get an explanation on how they got IRR(b). How did they get the 18.65%?

ally wie Parts really ilon RRT NPV You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $11.0 million. Investment A will e his generate $2.40 million per year (starting at the end of the first year) in perpetuity Investment B will generate $1.70 million at the end of the first year, and its revenues will grow at 3.2% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 8.1%? c. In this case, when does picking the higher IRR give the correct answer as to which investment is the best opportunity RR (R our IRRA = 21.82% To calculate the IRR, set NPV = 0 and solve for r in this equation: CF NPV = -CFO r-9 Setting NPVA - O and solving for: $1.70 million 7-0.032 $11.0 million NPVg = 0 = Therefore, IRRg=18.65% Based on the IRR, you would pick investment A, because it is the investment with the higher IRR. b. Which investment has the higher NPV then the cost of capital is 8.1%? To calculate the NPV of investment A, use the following formula