Dawn Holman has two alternative investment opportunities to evaluate. The first opportunity would cost $299,024.46 and generate expected cash inflows of $42,000 per year for 17 years. The second opportunity would cost $273,818.88 and generate expected cash inflows of $36,000 per year for 15 years. Ms. Holman has sufficient funds available to accept only one opportunity.
Required
Round present value factors to six decimal points.
a. Calculate the internal rate of return of each investment opportunity.
b. Based on the internal rate of return criteria, which opportunity should Ms. Holman select?
c. Identify two other evaluation techniques Ms. Holman could use to compare the investment opportunities.