OLA #11.2

Due to a restricted budget, a company can only undertake one of the following projects:

Project X: This project has an initial investment of $850,000 and annual profits of $400,000 in year 1, $400,000 in year 2 and $325,000 in year 3.

Project Y: This project has an initial investment of $850,000 and a profit of $1,050,000 in year 3.

a.Calculate the IRR for Project X.

b.Calculate the IRR for Project Y.

c.Which project should the company undertake?

Kindly add all the decimals DO NOT ROUND