After receiving money from your summer internship, you decide to invest the money. Alternatively, you can save the money and which you assume will earn 7% per year. You have two mutually exclusive opportunities to invest in. These are described below. Alternative A requires an up-front investment of $2,300. It will produce annual returns of $338 at the end of each year for 12 years. Salvage value is $242. Alternative B requires an up-front investment of $1,400. It will produce annual returns of $187 at the end of each year for 12 years. Salvage value is $394.

1.) In what order should you compare the alternatives? a. Do Nothing, Alternative A, Alternative B

b. Do Nothing, Alternative B, Alternative A

c. Alternative B, Alternative A, Do Nothing

d. Alternative A, Alternative B, Do Nothing

Conduct an IRR analysis to determine which investment, if either, should you invest in.

Carry all interim calculations to 5 decimal places and then round your final answers to 1 decimal place. The tolerance is 0.3.

2.) Following the order that was selected above, compare the first two alternatives. Calculate the IRR.

i* = ______ %

3.) Next, compare the last two alternatives. Calculate the IRR.

i* = ______ %