There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,665 and is expected to generate the following cash flows: First YearSecond YearThird YearTotalAlpha Project$31,500 $22,000 $4,500 $58,000Beta Project7,500 23,500 29,066 60,066A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return.Alpha Projectfill in the blank %Beta Projectfill in the blank %

The internal rate of return refers to a metric used in capital budgeting for measuring…

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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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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,665 and is expected to generate the following cash flows:

	First Year	Second Year	Third Year	Total
Alpha Project	$31,500	$22,000	$4,500	$58,000
Beta Project	7,500	23,500	29,066	60,066

A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return.

Alpha Project	fill in the blank %
Beta Project	fill in the blank %

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