Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 Project X2 IRR Project X1 $ (102,000) % % 36,000 46,500 71,500 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. Project X2 $ (164,000) Acceptable? 76,500 66,500 56,500
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 Project X2 IRR Project X1 $ (102,000) % % 36,000 46,500 71,500 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. Project X2 $ (164,000) Acceptable? 76,500 66,500 56,500
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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.
Initial investment
Net cash flows in:
Year 1
Year 2
Year 3
Project X1
Project X2
IRR
Project X1
$ (102,000)
%
%
36,000
46,500
71,500
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.
Project X2
$ (164,000)
Acceptable?
Check my work
76,500
66,500
56,500
2
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