Piercy, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$ 68,000 −$ 68,000 1 44,000 30,200 2 38,000 34,200 3 25,000 40,000 4 15,600 24,200 a-1. What is the IRR for each of these projects?

IRR for A= 35.33%

IRR for B = 31.88%

Explanation:

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested

IRR can be calculated using a finacial calculator :

IRR for cash flow A

Cash flow in year 0 = −$ 68,000

Cash flow in year 1 = $44,000

Cash flow in year 2 = $38,000

Cash flow in year 3 = $25,000

Cash flow in year 4 = $15,600

IRR = 35.33%

IRR for cash flow A

Cash flow in year 0 = −$ 68,000

Cash flow in year 1 = $30,200

Cash flow in year 2 =  34,200

Cash flow in year 3 = $40,000

Cash flow in year 4 = $24,200

IRR = 31.88%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button

The unit Product cost is $32.09

Explanation:

$

Add : Direct Material. 35

Add: Direct Labour 16

Prime Cost. 51

Add: variable manufacturing overhead. 15

Add: Fixed manufacturing overhead. 24,000

Production cost. 24,066

To determine the unit Product cost for the year we will divide the production cost by the unit produced

Production cost ÷ unit produced

Since the the production cost is $24,066 and unit produced is 750unit

24,066÷ 750

= 32.088

= 32.09

Therefore the unit Product cost is $32.09