Following is information on two alternative investments being considered by Tiger Co. The company requires a 8% return from its investments.Project X1Project X2Initial investment $(128,000) $(216,000) Expected net cash flows in: Year 1 49,000 96,000 Year 2 59,500 86,000 Year 3 84,500 76,000 ompute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return,hdicate whether each project is acceptable. (Round your answers to 2 decimal places.)Acceptable?IRRProject X1Project X2

Internal rate of return method: Internal rate of return method is one of the capital investment…

ompute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, hdicate whether each project is acceptable. (Round your answers to 2 decimal places.) Acceptable? IRR Project X1 Project X2

ompute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, hdicate whether each project is acceptable. (Round your answers to 2 decimal places.) Acceptable? IRR Project X1 Project X2

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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Question

Following is information on two alternative investments being considered by Tiger Co. The company requires a 8% return from its investments.

Project X1	Project X2
Initial investment		$	(128,000	)	$	(216,000	)
Expected net cash flows in:
Year 1			49,000			96,000
Year 2			59,500			86,000
Year 3			84,500			76,000

ompute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return,
hdicate whether each project is acceptable. (Round your answers to 2 decimal places.)
Acceptable?
IRR
Project X1
Project X2

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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