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
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 8TP: Fenton, Inc., has established a new strategic plan that calls for new capital investment. The...
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