Refer to the information in Exercise 26-10. 

(a) Create an Excel spreadsheet to compute the internal rate of return for each of the projects. 

(b) Based on internal rate of return, determine whether the company should accept either of the two projects.

Data From Exercise 26-10

Following is information on two alternative investment projects being considered by Tiger Co. The company requires a 4% return from its investments. Compute each project’s 

(a) Net present value and 

(b) Profitability index. Round present value calculations to the nearest dollar and round the profitability index to two decimals. 

(c) If the company can choose only one project, which should it choose on the basis of profitability index?

Transcribed Image Text:

Project X1 Project X2 Initial investment. $(80,000) $(120,000) Net cash flows: Year 1 25,000 60,000 Year 2 35,500 50,000 Year 3 60,500 40,000