Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $254,695 $175,822 Net cash flows anticipated: Year 1 83,000 35,000 Year 2 59,000 55,000 Year 3 91,000 71,000 Year 4 82,000 69,000 Year 5 75,000 27,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X % Project Y % B. Which project should be recommended.

Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $254,695 $175,822 Net cash flows anticipated: Year 1 83,000 35,000 Year 2 59,000 55,000 Year 3 91,000 71,000 Year 4 82,000 69,000 Year 5 75,000 27,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X % Project Y % B. Which project should be recommended.

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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