Jane is managing a software development project and has to send project performance report to her sponsor

including forecast for completion costs. The project is budgeted at $100,000; the cost performance index is
0.8 and $20,000 out of it already spent. Given this data, how much more money does Jane need to complete
the project?

- Solution
Here , we need to calculate ETC for Janes project which can be done using the formula EAC AC. Let us find out EAC first,
that can be done using formula EAC = BAC / CPI
EAC = BAC / CPI = 100,000/0.8 = 125,000
ETC = EAC AC = 125,000 20,000 = 105,000
Rick is a project manager and he is halfway through his project. While making his monthly project
performance reports, he observed that cost and schedule variances are very high in the project, since these
things are beyond the control he purposed new cost baselines for the project. Management approved the
budget of 100,000 for remaining work . Team has already burned through $80,000 till now. What is the
estimated cost at completion?

- Solution
As per new baseline, $100,000 is the ETC (estimate to complete) and $80,000 is the actual cost spent in the project.
Considering the fact that projects baselines are revised, the formula to calculate EAC (estimate at completion) = AC + Revised
ETC = $80,000 + $100,000 = $180,000

In your project the cost variance is negative and the SPI is smaller than one. Which of the following best describes the
performance of the project at this moment of time?

Your project is ahead of budget but behind schedule

Your project is ahead of budget but on schedule

Your project is behind budget and ahead of schedule

Your project is behind budget and behind schedule

 - Solution
A negative Cost Variance (lower than 1) means that you are spending more than planned, which means that you are behind (or
over) budget.
If the SPI is smaller than one, this means that you are progressing slower than planned, which means that you are behind
schedule.
You are managing a software development project with initial cost baseline as $100,000. You have spent
$80,000 so far and the project almost 60% complete. Senior management has approved budget of $160,000
for the project. What should be your cost performance if you want to complete your project within the new
approved budget?

- Solution
Here, we have to calculate TCPI based in EAC.
The formula is TCPI = (BAC EV)/(EAC AC)
BAC is given as $100,000, AC as 80,000.
EV can be calculated from the fact given that 60% project is complete i.e. 60% of $100,000 = 60,000

EAC is provided as $160,000

TCPI = (100,000 60,000)/(160,000 80,000)
= 40,000/80,000 = 0.5
As a project manager you have to send a status report to your senior management including forecast for
completion costs. If the project is budgeted at $200,000, the CPI is 0.8 and $40,000 of the project budget has
already been spent, how much more money do you estimate you will spend to complete the project?

- Solution
We need to calculate EAC first, EAC = BAC/ CPI = 200,000 / .8 = 250,000 ETC can be calculated as EAC AC = 250,000
40,000 = $210,000

You are managing a project which is doing well as per cost and schedule is concerned, both CPI and SPI is 1.
You are going on leaves of 15 days and you hand over your project management activities to your project
lead. In these 15 days, as per plan work of about $15,000 needs to be done. When you come back from your
leaves after 15 days, you found that work worth $10,000 and that too have completed after spending $12,000.
Your project lead informed you that two resources also went on unplanned leaves in your absence. Now you
have to report to your management about your projects cost performance and schedule performance as CPI
and SPI. Which of the following correctly gives the CPI and SPI for your project?
 - Solution
Planned value is given as $15,000 Earned value is $10,000 (as work worth $10,000 has been completed in given time period)
Actual cost is $12,000 CPI can be calculated as EV/AC = 10,000/12,000 = 0.83 SPI can be calculated as EV/PV =
10,000/15,000 = 0.66 Project has suffered both in terms of cost as well as schedule, as both the values are <1

The budget at completion of your project is $120,000. Till now you have actually completed 40% of work after
spending $60,000. What is the cost variance at this moment of time for the project?

- Solution
For calculation of cost variance, we need value of EV and AC EV = 40% of 120,000 = 48,000 AC = 60,000 CV = EV AC =
48,000 60,000 = - 12,000
Which of the following can tell us the difference between the budget at completion and estimate at
completion?

- Solution
VAC, Variance at Completion is projection of the amount of budget deficit or surplus, expressed as the difference between the
budget at completion and the estimate at completion.

You are managing a project which is estimated to cost $ 300,000 with a timeline of 10 months. Due to some
reasons schedule was slightly delayed and the net result was that there was some additional cost in the
project. At the end of the third month, you review the project and find that the project is 30% complete and
Actual Costs are $ 50,000. The Estimate to complete (ETC) for the project would now be:
 - Solution
ETC Estimate to complete can be calculated using formula BAC EV
BAC Budget at Completion is given as $300,000
Actual Cost given as $ 50,000 (not required in this calculation though)
EV, Earned Value = (3/ 10 ) * 300,000 = $90,000 (as 30% project of the project is complete )
Implementing formula, ETC = $300,000 - $90,000 = $210,000
Rick is managing a project which is budgeted for $100,000. The project is expected to last for 10 months with
work spread evenly across all the months. At the end of fifth month, he noticed that $50,000 have actually
been spent in the project and only 40% of the work has been done. What is the schedule variance percentage
in this scenario?

- Solution
Earned value is 40% of $100,000 i.e. $40,000.
Planned value at the end of fifth month is $50,000 (as work of $100,000 has been distributed evenly among 10 months)
Schedule variance = EV PV = 40,000 - 50,000 = -10,000
Schedule variance percentage = (-10,000 / 50,000) * 100 = -20%

Nick is managing a software development having cost baseline as $120,000. He needs to attend a training
which is scheduled for two weeks, so he asked Ray, one of his senior team members to manage project in
his absence. Till the day Nick was managing the project, he has got the work done worth $20,000 and ratio of
earned value to actual cost is 1. In the weeks when Nick will be attending the training, work worth 20,000
need to be accomplished. When Nick came back he found that work worth $10,000 has been completed after
spending $15,000. Because of high variances, Nick decided to re-estimate the whole project and got the
amount $150,000 as new project cost baseline. After re-estimation, what would be the cost of remaining work
of the project?
 - Solution
Here we have to calculate ETC, which can be calculated as EAC AC

EAC can be taken as 150,000 (as whole project is re-estimated) and AC is 20,000 + 15,000

ETC = 150,000 35,000 = 115,000

you are managing a construction project budgeted at $250,000. As of today, the project should be 40%
complete, but after reviewing the status of the scheduled tasks, it is evident that only 30% of the work has
been achieved and team has already spent $125,000 so far. Which of the following can best describe the
current status of your project?

Project is running late, but on budget

Project is on schedule and on budget

Project is on schedule, but over budg

Project is running late and over budg

- Solution
To get the status of the project, we need to find out cost performance index and schedule performance index. Formulas that can
be used to calculate CPI and SPI are
CPI = EV/AC , SPI = EV/PV
Value of AC (Actual costs) is given i.e. $125,000 and now we have to calculate value of EV and PV.
Lets calculate EV first, EV = 30% of $250,000 = $75,000
Now we need to calculate PV = 40% of $250,000 = $100,000
CPI = 75,000/125,000 = 0.6
SPI = 75,000/100,000 = 0.75
CPI < 1 and SPI <1, that means Project is behind schedule and over budget

Sam is the project manager in an organization and has to decide between Project A having IRR (internal rate
of return) of 18% and project B, which has an IRR of 9%. If all other criteria being equal, which project should
Sam choose?

- Solution
Internal rate of return is the rate at which an investment will yield returns. The project with higher internal rate of return is the
better option to select. In this scenario, Project A is better option for Sam.
Raymond has been asked by his senior management is to calculate to-complete performance index for his
project after he revised and approved estimate to complete for his project as 400,000. The budget at
completion for his project is 650,000. Current cost variance has been reported as 20,000 and earned value of
the project till date is 150,000. Calculate TCPI for Raymonds project considering the data provided.

- Solution
The formula that we are going to use to calculate TCPI is (BAC EV) /(EAC AC)
We need to calculate value of AC
CV = EV AC
AC = EV CV = 150,000 20,000 = 130,000
EAC = AC + ETC (as the initial budget is no longer valid)
= 130,000 + 400,000 = 530,000
TCPI = (650,000 150,000) /(530,000 130,000)
= 500,000/400,000
= 1.25
You are updating the status for your project. As per the project performance till the time, project is expected
to finish 15 days prior to the planned finish date and you can foresee that project costs will exceed the
budgeted costs. What can be said about the schedule performance index of your project?

- Solution
As project is ahead of schedule, it will have a SPI value greater than 1.0 since it indicates that more work was completed than
was planned.
You are managing a project which is schedules to complete in 14 months and total budget of $ 400,000. On
the completion of 10th month, the planned value is $ 320,000 what will be the planned percent complete on
completion of 10th month?
 - Solution
Formula we can use is PV = BAC X Scheduled % Completed
PV given as $ 320,000 and Budget (BAC) is given as $ 400,000
Scheduled % Completed = PV / BAC = $ 320,000 / $ 400,000 = 80%
Project X has a payback period of 26 months. Project Y has a cost of $500,000, with expected cash inflows of
$200,000 the first year and $50,000 per quarter after that. Which project should you recommend?

- Solution
Lets calculate Payback period of project Y
In 12 months = $200,000
In next 12 months = $200,000 + $200,000
In next 6 months = $200,000 + $200,000 +$100,000 = $500,000
Payback period of project Y is 30 months which is higher than payback period of project X
Project with lower payback period is always a better investment option
You are the project manager of a construction project with initial cost baseline as $150,000. You have already
spent $100,000 in your project till date. The cost variance of your project is -10,000.You have requested your
senior management to revise the estimate at completion, which they rejected. From the above facts provided,
what would be the to-complete performance index of your project based on your current performance?

- Solution
AC is given as $100,000, CV as -10,000 and BAC as $150,000
The formula to calculate TCPI is (BAC-EV)/(BAC-AC)

We need value of EV, which can be calculated from formula CV= EV-AC
EV = CV+AC
= -10,000 + 100,000 = 90,000
TCPI = (150,000 90,000)/(150,000 100,000)
= 60,000/50,000
= 1.2
A project had PV of $40,000, an EV of $35,000 and AC of $45,000. What is the schedule variance for the
project?
 - Solution
Dont get thrown off by the value of AC provided in the question. This is just an extra piece of information which is not required
to calculate SV
Schedule Variance = EV-PV = 35,000 40,000 = (-) $5,000
Sunita is managing a project which have actually completed $40,000 of work, but based on the cost plan it
should be $65,000. What is percentage Schedule Variance (SV) in this case?

- Solution
Let us first calculate schedule variance, for which we need PV and EV. PV is given as $65,000 and EV is given as $40,000
Schedule Variance = EV PV = 40,000 65,000 = -25,000 Schedule Variance percentage =( -25,000 / 65,000 ) * 100 = 38.4%

Your project has a budget of $240,000 and is expect to last for 1 year, with the work and budget spread
evenly across all months. The project is now in the fourth month, the work is on schedule, but you have
already spent $120,000 of the project budget. What is your COST Variance in this case?

- Solution
For calculating cost variance, we need to use formula - CV = EV-AC The budget of the project for 12 months is $240,000
spread evenly across all month, so in fourth month the EV will be $80,000 Value for AC (actual costs) has been given as
$120,000 CV can be calculated as 80,000 - 120,000 = (-)40,000

Rick has done bottom-up estimation to calculate cost baseline for his project as 100,000. He has informed
the senior about the amount to be allocated to his project. Management granted the asked cost baseline
amount and kept $40,000 as management reserve with them. The project is planned to complete in one year
with work spread evenly across all the months. At the completion of month four, only 40% of the work has
been done and total $50,000 has been spent. The work is going with CPI of 0.8 and there is no reason Rick
can foresee for any deviation from this rate of spending in the project. Calculate estimate at completion for
the project.

- Solution
Here we have to calculate EAC, using formula BAC/CPI

BAC is given as 100,000 and CPI as 0.8

EAC = 100,000 / 0.8 = 125,000

After doing bottom-up estimation, Rick has figured out figure of $120,000 as cost baseline for his project. He
has informed the senior about the amount to be allocated to his project. Management granted the asked cost
baseline amount and kept $100,000 as management reserve with them. The project is planned to complete in
one year with work spread evenly across all the months. At the completion of month four, only 30% of the
work has been done and total $50,000 has been spent. Calculate CV and SV for the project at the completion
of month four.

CV = 20,000 and SV = 10,000

CV = (-) 200,000 and SV = ()-) 100,000

CV = (-) 20,000 and SV = (-) 10,000

CV = 200,000 and SV = 100,000

- Solution
For calculation of CV and SV, we need to have values of EV, PV and AC at the completion of month four
While calculating EV and PV, we need to take BAC as 120,000. The management reserve is not used to calculation of project
cost performance or schedule performance.
EV = 30,000 ( as 30% of work is done against planned 40% work)
PV = 40,000
AC = $50,000
CV = EV AC = 30,000 50,000 = -20,000
SV = EV PV = 30,000 40,000 = -10,000

The initial cost baseline for the project is $400,000 and planned value of the work done in your project till
date is $100,000. The actual work done till date in the project is worth $105,000 after spending $101,000.
When you calculate estimate at completion for your project, its $380,000, what is VAC for your project?
 - Solution
VAC = BAC EAC
BAC is give n as $400,000 and EAC is given as $380,000. The other data about the project is not required to calculate VAC
VAC = $400,000 - $380,000 = $20,000

Your project is halfway done. In your project review meeting, you informed your management team that cost
baseline for your project is $500,000, cost performance index of your project is 1.4 and work worth $300,000
has been completed till date. Your sponsor asked you what is the percentage complete of your project, which
of the following is the correct answer?

- Solution
Percentage Complete = EV/BAC x 100
= 300,000/500,000 x 100
= 60 %
In your project, a task was scheduled to use two trained resources for two full weeks to complete. But
because of other urgent assignments, your project only assigned one trained resource and another resource
which is a fresher and half the cost. At the end of two weeks, 80% of the task has been completed. What is
the cost performance index?

- Solution
In this question, we need to take some assumptions:
If we assume that work need was planned to take 100 hours of effort, with $10 per hour rate for trained resource, the planned
value = 100 x 20 = $2,000
Now as one of the trained resource is replaced by another with half the cost, the AC = 100 x 15 = $1,500
Value for EV can be derived from the information that 80% has been done, i.e. 80% of $2,000 = $1,600
CPI can be calculated using formula EV/AC = 1600/1500 = 1.066
Project A requires investment of $500,000. The project is expected to generate $25K per quarter for first year
and $100K per quarter after that. What is the payback period?

- Solution
For first year 25,000 * 4 = 100,000 will be paid back
In Second year - 100,000 * 4 = 400,000 will be paid back
If we total for first and second year, its 500,000
The payback period for the project is 2 years.
Jane is working on a project as project manager. Project is half way through. When she calculated to-
complete performance index for the project, it comes out to be 1.17. Which of the following represents the
best course of action for Jane?

Manage cost with lenience

Manage cost aggressively

Create a new schedule

Project is going fine, no specific consideration

- Solution
TCPI is measure of the cost performance that must be achieved with the remaining resources in order to meet a specified
management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available. If value of TCPI is
above 1, that means project cost need to be managed aggressively and if value of TCPI is lesser than 1 it means it is easier to
meet money related project goals

You are managing two projects from a single Business Unit and happy over the success of both the projects
as both projects are regarding as strategically beneficial and have been finishes by over 85%. The project
sponsor requested earned value data on these two concurrent projects from you and these both projects are
equally important for the sponsor. You provide the following information to the sponsor:

Project A:
PV: $1,900,000
EV: $2,400,000
AC: $2,100,000

Project B:
PV: $2,100,000
EV: $1,600,000
AC: $1,700,000

After reviewing the data provided to him, the sponsor considers to shift some resources from project A to
project B to speed up the second project which is currently behind schedule.
What is the most likely outcome of such a measure?

To increase cost efficiency - Changing team assignments during late course of a

To increase time efficiency - Changing team assignments during late course of

According to the law of diminishing returns, the consolidated cost variance of t

According to the law of diminishing returns, the consolidated cost variance of t

- Solution
PV Planned value , EV Earned value and AC Actual cost , these parameters can provide the cost variance of the projects
(CV = EV- AC). Cost Variance is very important factor to measure project performance by giving information that is how much
over or under budget the project is. Cost Variance for Project A = $2,400,000 - $2,100,000 = $200,000 and CV for project B =
$1,600,000 - $1,700,000 = -$100,000. Positive CV means project is under budget and negative value of CV project is over
budget. So by shifting resources from Project A to B the consolidated cost variance of both the projects will decrease and help
project B to be on the right track and right schedule.

Jay is managing a project which is planned to be taking effort of 1200 hours and will cost $150 per hour.
When the project is completed, it had taken 1400 hours of efforts with the cost of $200 per hour. Calculate
CPI and SPI.

- Solution
Planned value, PV can be calculated as 1200 * 150 = 180,000
Earned Value = 180,000, as the project is completed all budgeted work has been earned
Actual Cost can be calculated as 1400 * 200 = 280,000
CPI = EV/AC = 180,000/280,000 = 0.642
SPI = EV/PV = 180,000/180,000 =1

Julia needs to calculate the to-complete performance index of her project, based on EAC, given that the
actual cost of her project is $100,000, cost variance is $60,000, and the budget at completion is $280,000.
 - Solution
First, we need to calculate EAC, before we move to calculate TCPI.
CV = EV AC
EV = CV + AC = 60,000 + 100,000 = 160,000
CPI = EV/AC = 160,000/100,000 = 1.6
Now, calculate EAC by formula BAC / CPI = 280,000/1.6 = 175,000
TCPI = (BAC EV) /(EAC AC)
= (280,000 - 160,000)/( 175,000 - 100,000)
= 120,000/75,000
= 1.6
As per the project management plan of Joes project, $200,000 has been assigned to it as project cost
baseline. The project is planned to finish in one year. At the end of one year, on the planned date of
completion, 90% of the work has been accomplished. Calculate schedule performance index for the project.

- Solution
For calculation of Schedule Performance Index, we need to know EV and PV
EV = 90% of 200,000 = 180,000 and PV = 200,000

SPI = EV/PV = 180,000 / 200,000 = 0.9

WBS o your project includes work package X,Y and Z. What is the expected EMV of the project given the
following data:
Work package X has a schedule risk that might cost $9,000.
Work package Y has a cost risk probability of 25% with an impact of $10,000
Work package Z has a positive impact of $40,000.

- Solution
Work package X is a negative risk costing $9,000
Work package Y has a cost risk probability of 25% and an impact of $10,000 = 10,000 x 25/100 = (-) $2,500
Work package C has a positive impact of $40,000
Total EMV = (-) 9,000 + (-) 2,500 +40,000 = (+) $28,500

Ray is the project manager of a portal development project. The project has a budget of $10,000 and is
expected to finish in 6 months, with the work and budget spread evenly across all months. The current CPI of
the project is 0.8. What is the variance at completion in this case?
 - Solution
Variance at completion = BAC EAC
EAC = BAC/CPI = 10,000/0.8 = 12,500
VAC = 10,000 12,500 = (-)2,500

Your organization has received a project A having NPV of $76,000. However you got to know from senior
management that they have decide to pursue a different project B, having NPV of $87,000. What is the
opportunity cost of selecting Project B?

- Solution
The unrealized profits are the opportunity cost of that selection decision. In the given scenario, NPV of project A (which is not
chosen) is the opportunity cost i.e. $76,000.

Your project has a CV of -180. Which of the following best describes the project cost performance?

Your project is under budget

Your SPI is also negative

Your project is above budget

CV cannot be negative and there must be an error in the calculation

- Solution
Cost Variance can be calculated as = EV - AC.

A negative value of Cost Variance means that you have spent more than you have earned. Thus you are spending more than is
coming in, you are over budget and your project is doing poorly as per cost performance is concerned.
The PV for a project is $10,000, the EV is $25,000 and the AC is $15,000. What is the schedule performance
index?

- Solution
SPI (Schedule Performance Index) = EV / PV = 25,000 / 10,000 = 2.5
SPI if greater than 1 implies that project is ahead of schedule.

Sue is managing a project having estimated value of total planned work as $120,000. The project is expected
to last for one year with work spread evenly across all the months and project is progressing with cost
efficiency of budgeted resources as 1.2. What is the expected total cost of completion of all work for the
project?

- Solution
In this case we need to calculate EAC, and can use formula BAC/CPI

BAC i.e. value of total planned work = 120,000

CPI, i.e. cost efficiency of resources is given as 1.2

EAC = 120,000 / 1.2 = 100,000

Joe has estimated cost baseline for his project as $100,000 which need to be completed in a year. After 4
months, the earned value of the work completed is $20,000 that too after spending $50,000. He realised that
initial estimates were flawed and calculated new estimate at completion as $150,000. What is the VAC for
Joes project?
 - Solution
A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the
estimate at completion. It is calculated as, VAC = BAC EAC
= 100,000 150,000 = -50,000

Mike is a Project Manager for ABC consultants. He has been asked to help choose one of the four potential
project candidates. The management used Payback period technique for project selection. Which of the
following projects should Mike recommend to the management?

Building an Office. Project involves making an investment of $1,000,000. Afte

Building a highway. Project involves making an investment of $10,000,000. Af

Building a house. Project involves making an investment of $5,000,000. After

Building a Hotel. Project involves making an investment of $2,500,000. After t

- Solution
Lets calculate the payback period for all the given options, Its 46 months for option A, 44 months for option B, 62 months for
option C, 46 months for option D Lesser the payback period, better it is. So B is the better choice project to select among the
given options.
A project costs $500,000 the first year and earns revenue of $100,000 the first year. In the second year, costs
are $500,000 again with revenue of $300,000. In each subsequent year, costs are $0 and revenue is $300,000.
When will the project break even?

- Solution
In the first year Costs = $500,000 and the revenue = $100,000, so costs are greater than revenue In the second year, total costs
=$500,000 +$500,000 = $1,000,000 and total revenue = $100,000 + $300,000 = $400,000 By the end of third year, total costs =
=$500,000 +$500,000+$0 = $1,000,000 and revenue = $100,000 + $300,000 +$300,000 = $700,000 By the end of fourth year,
total costs = =$500,000 +$500,000+$0 +$0 = $1,000,000 and revenue = $100,000 + $300,000 +$300,000 +$300,000 =
$1,000,000. By the 4th year, costs and revenue are equal and we have reached the break-even point.

Joes project has suffered a cost and schedule slippage. The root cause analysis for these slippages, found
that variances are atypical in nature. Joe was allocated with $20,000for this project . Work worth $4,000 is
done and cost performance index is 0.8, what is the estimate at complete for the project?
 - Solution
Here we have to calculate EAC, and formula which need to use is EAC = AC + (BAC EV)
Here, value of AC is not provided, but can be calculated from CPI and EV-

CPI = EV/AC , AC = EV/CPI = 4000/ 0.8 = 5,000

EAC =5,000 + (20,000 4000) = 5,000 + 16,000 = 21,000

BS of your project has got two code of accounts. The planned costs for these code of accounts are $4,000
(1.1) and $3,000(1.2) respectively. The project is planned to be finished in 10 days. If we compare the amount
of work, its almost equal under both code of accounts, but because of kind of resources required, there is
difference in costs.
On 10th day, work for code of account 1.1 has been fully completed, and 70% for the 1.2. And the total money
that has been spent till day 10 is $6,000. Calculate CV and SV for the project on Day 10.

CV = 100 and S

CV = (-)100 and

CV = 100 and S

CV = (-)100 and

- Solution
Planned value or your project = 4,000 + 3,000 = $7,000 Earned value = 4,000 + (70% of 3,000) = 4,000 + 2,100 = $6,100
Actual Costs is given as $6,000 Cost Variance , CV can be calculated as EV AC = 6,100 6,000 = 100 Schedule Variance can
be calculated as EV PV = 6,100 7,000 = (-)900
If a new project in your organization has a 90% chance of earning $30,000 and a 15% chance of losing
$35,000.What is the expected EMV of the project?

- Solution
EMV = Impact x probability
90% chance of earning $30,000, this is a positive risk, and EMV = 30,000 x 90/100 = 27,000

15% chance of losing $35,000, a negative risk

EMV = 35,000 x 15/100 = (-) 5,250
Total EMV = 27,000+ (-) 5,250 = $21,750
. Given EV = 30,000, PV = 35,000, and AC = 28,000, what is the value of CV?

- Solution
CV can be calculated by EV (Earned Value) AC (Actual Costs)
i.e. 30,000 28,000 = -2,000

Negative value of CV indicates that the project is Over Budget.

CV (Cost Variance) is calculated by EV (Earned Value) AC (Actual Cost). The -2,000 means that the project is $2,000 over
budget.
Project A has an internal rate return (IRR) of 22 percent. Project B has an IRR of 10 percent, project C has IRR
of 29 percent and Project D has an IRR of 17 percent. Which of these would be the BEST project ?

- Solution
Point to remember The internal rate of return is similar to the interest you get from bank for the money you have deposited. So
higher the rate given by bank on our money, better it would be and in similar way higher the rate IRR is better the return.