Following is information on two alternative investment projects being considered by Tiger Company. The company requires a
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Question:
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 4% return from its investments.
Project X1 | Project X2 | |
---|---|---|
Initial investment | $ (130,000) | $ (220,000) |
Net cash flows in: | ||
Year 1 | 50,000 | 97,500 |
Year 2 | 60,500 | 87,500 |
Year 3 | 85,500 | 77,500 |
Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable.
Note: Round your answers to 2 decimal places.
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