A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects have the highest internal rate of return?
A) $25,000 initial outlay with $10,000 cash inflows during the following five years
B) $12,500 initial outlay with $10,000 cash inflows during the following five years
C) $25,000 initial outlay with $5,000 cash inflows during the following five years
D) $12,500 initial outlay with $5,000 cash inflows during the following five years

Question

Quizplus · Accepted Answer

Project B has the highest internal rate of return because it has a lower initial outlay compared to Project A, but the same cash inflows, leading to a higher return on investment.

A Project Manager Is Using the Internal Rate of Return