There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,675 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,000 $22,000 $4,500 $58,500 Beta Project 7,000 24,000 28,010 59,010 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project _____% Beta Project _____% B. Make a recommendation on which one to accept. _____
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,675 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,000 $22,000 $4,500 $58,500 Beta Project 7,000 24,000 28,010 59,010 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project _____% Beta Project _____% B. Make a recommendation on which one to accept. _____
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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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,675 and is expected to generate the following cash flows:
| First Year | Second Year | Third Year | Total | |
| Alpha Project | $32,000 | $22,000 | $4,500 | $58,500 |
| Beta Project | 7,000 | 24,000 | 28,010 | 59,010 |
A. Calculate the
Alpha Project _____%
Beta Project _____%
B. Make a recommendation on which one to accept.
_____
Transcribed Image Text:There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,675 and is expected to generate the following cash flows:
First Year Second Year Third Year
Total
Alpha Project
$32,000
$22,000
$4,500
$58,500
Beta Project
7,000
24,000
28,010
59,010
A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return.
Alpha Project
%
Beta Project
%
B. Make a recommendation on which one to accept.
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