Jasper, Inc., is considering two mutually exclusive investments. Alternative A has a current outlay of $ 300,000

Question:

Jasper, Inc., is considering two mutually exclusive investments. Alternative A has a current outlay of $ 300,000 and returns $ 100,300 a year for five years. Alternative B has a current outlay of $ 150,000 and returns $ 55,783 a year for five years.

Required:

a. Calculate the internal rate of return for each alternative.

b. Which alternative should Jasper take if the required rate of return for similar projects in the capital market is 15 percent?

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...