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You are the project engineer at sound plastics LLC, have narrowed down the technical specification to two options, and you have been asked to recommend which option is the best from the economical point of view. Option 1 is to purchase a unit from sterling extruders at a price of $ 2,450,000. It will produce up to 5,700,000lbs. of polyethylene fil which i would be sold at an average price of $1.15lb. The cost of the PE resin required to produce this film is $0.65lb. The operating costs are $1,296,000 in year 1, and $1,373,760 in year 2. Total revenue is assumed to remainconstant for both years. Option 2 is to purchase a unit from Egan Machinery Co at a proce of $3,075,000. This unit can produce 8,500,000 lbs. of PE film. The selling price per Lb and the cost of raw material is the same as in option 1. The operating costs are higher than option 1 because it requires specialized skills to operate and maintain this equipment, $1,490,400 in year 1, and $1,579,824 in year 2. Sounds plactics ownwer has a policy that all investment projetcs need to show a return on the investment of 15%

calculate the IRR for each option, applying the incremental invertments analysis learn in class, indicate which option you would recommend if any