13.18 Comparison of projects with unequal lives. (20–30 min) 1 Internal rate of return Project 1 Let F = Present-value factor of €1 at X% received at the end of year 1 (Appendix B, Table 2) €10,000 = PV of €12,000 at X% to be received at the end of year 1 F = 10, 000 12, 000 € € = 0.833 IRR = 20% Project 2 Let F = Present-value factor of €1 at X% received at the end of year 4 (Appendix B, Table 2). €10,000 = PV of €17,500 at X% to be received at the end of year 4 F = 10, 000 17, 500 € € = 0.571
