Ranking projects by IRR

Year	Project A	Project B	Discount Factor @ 18%	Present Value - A	Present Value - B
0	-500	-500	1	-500.00	-500.00
1	167	200	0.8475	141.53	169.50
2	180	250	0.7182	129.28	179.55
3	160	170	0.6086	97.38	103.46
4	100	25	0.5158	51.58	12.90
5	100	30	0.4371	43.71	13.11
				-36.53	-21.48

Internal rate of return  = small % + (large % - small %) [positive NPV/(positive NPV - negative NPV)]

IRR - A = 12% + (18% - 12%) [26.79/ 26.79+36.53]
            = 12% + (6%) (26.79/63.32)
            = 0.1454

IRR - B = 12% + (18% - 12%) [31.80/ 31.80 + 21.48]
            = 12% + (6%) [31.80/ 53.28]
            = 0.1566

Project B will be preferred as it has a higher IRR compared to Project A.
However, both projects are desirable as they both have IRR higher than the cost of capital of 12%.