There are two mutually exclusive investment projects available to you. Project A achieves an internal rate of return of 7.35%. Project B requires an initial payout of CHF 4,200 and produces a deposit of CHF 5,600 at the end of its useful life (4 years). In addition, for project B you have to pay a bolting fee of CHF 300, which is due at the end of the useful life. The calculation interest rate is 8.00% pa. What is the internal interest rate of Project B? And which project is preferable based on the internal interest rate?

Step 1: Solve for the internal rate of return (IRR) of Project B using the given formula:

-\text{Initial Investment} + \frac{\text{Future Value - Bolting Fee}}{(1 + r)^n} = 0

Let's substitute the values for Project B:

Initial Investment = 200,000
Future Value = 325,000
Bolting Fee = 60,000
n = 4 years

-200,000 + \frac{325,000 - 60,000}{(1 + r)^4} = 0

Solving for r:

-200,000 + \frac{265,000}{(1 + r)^4} = 0

\frac{265,000}{(1 + r)^4} = 200,000

(1 + r)^4 = \frac{265,000}{200,000}

1 + r = \sqrt[4]{\frac{265,000}{200,000}}

r = \sqrt[4]{\frac{265,000}{200,000}} - 1

Step 2: Calculate the numerical value of the internal rate of return for Project B:

r \approx \sqrt[4]{\frac{265,000}{200,000}} - 1 \approx 0.0599

Step 3: Answer:
The internal rate of return (IRR) for Project B is approximately 5.99%.

Comparing IRRs:
- Project A has an IRR of 7.35%.
- Project B has an IRR of approximately 5.99%.

Based on the internal rate of return, Project A is preferable as it has a higher IRR than Project B.