There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,168 and is expected to generate the following cash flows First Year Second Year Third Year Total Alpha Project $23,000 $4,500 $60,000 Beta Project 23,500 27,594 58,594 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. % % $32,500 7,500 Alpha Project Beta Project B. Make a recommendation on which one to accept. Alpha

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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CH11 Q4

There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,168 and is expected to generate the following cash flows:
First Year Second Year Third Year Total
Alpha Project
$23,000
$4,500
$60,000
Beta Project
23,500
27,594 58,594
A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return.
$32,500
7,500
Alpha
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 $35,168 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $23,000 $4,500 $60,000 Beta Project 23,500 27,594 58,594 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. $32,500 7,500 Alpha Alpha Project Beta Project B. Make a recommendation on which one to accept. % %
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