IRR

Brown intends to start a new project producing either Product A or Product B. Each product will require an additional capital cost of $50 000. Both products are expected to last 4 years.
The following information is available on Product A:
1. Sales volume in year 1 would be 10000 units with a selling price of $7.
2. The volume would rise by 5% in year 2 and by another 5% in Year 3
3. Popularity is then expected to fall in year 4 and there would be a 20% fall in volume.
4. The selling price would not change.
5. The variable costs will be $3 per unit in year 1, will rise to $4 in year 2 and will then remain unchanged.
6. Annual fixed costs payable will be $11 000 and will remain unchanged.
Required
(a) Calculate the net cash flows for each year and in total for product A [10]
Additional Information
Brown’s cost of capital is 10% and the discount factors are: Year 10% 25%
1
0.909
0.800
2
0.826
0.640
3
0.751
0.512
4
0.683
0.410
Required
(b) Calculate the net present value of Product A. [5]
3
(c) Calculate the Internal Rate of Return for Product A [7]
Additional Information
Brown has carried out the same calculations for product B. He has calculated the net present value of Product B as $30 400.
Required
(d) Advise Brown which product he should make based solely on the net present value. Justify your answer. [2]
(e) Explain why Brown may or may not use the payback method. [3]
(f) State three non-financial factors Brown should consider when choosing between Product A and Product B.

My question is that i am obtaining positive value for both npvs. Is it possible?