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 $253,611 $179,492 Net cash flows anticipated: Year 1 81,000 34,000 Year 2 59,000 55,000 Year 3 92,000 72,000 Year 4 82,000 69,000 Year 5 75,000 26,000 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 $253,611 $179,492 Net cash flows anticipated: Year 1 81,000 34,000 Year 2 59,000 55,000 Year 3 92,000 72,000 Year 4 82,000 69,000 Year 5 75,000 26,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X % Project Y % B. Which project should be recommended.
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
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