There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,370 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $22,000 $4,500 $59,000 Beta Project 8,000 23,500 29,703 61,203 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 $35,370 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $22,000 $4,500 $59,000 Beta Project 8,000 23,500 29,703 61,203 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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