Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Project X1Project X2Initial investment$ (112,000)$ (184,000)Net cash flows in: Year 141,00084,000Year 251,50074,000Year 376,50064,000 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. (Round your answers to 2 decimal places.)

IRR stands for Internal rate of return. It is technique used in capital budgeting to make appraisal…

Answered: 5% return

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments.

	Project X1	Project X2
Initial investment	$ (112,000)	$ (184,000)
Net cash flows in:
Year 1	41,000	84,000
Year 2	51,500	74,000
Year 3	76,500	64,000

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. (Round your answers to 2 decimal places.)

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