Refer to the information in Exercise 11-11. Create an Excel spreadsheet to compute the internal rate of
Question:
Refer to the information in Exercise 11-11. Create an Excel spreadsheet to compute the internal rate of return for each of the projects. Based on internal rate of return, determine whether the company should accept either of the two projects.
In Exercise 11-11
Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% return from its investments.
____________________________________Project X1 __________Project X2
Initial investment . . . . . . . . . . . . . . . . . . . . . . ($80,000) ................. ($120,000)
Expected net cash flows in year:
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 ..................... 60,000
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,500 ..................... 50,000
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,500 ..................... 40,000
Internal Rate of ReturnInternal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
Step by Step Answer:
Project X1 X2 has an internal rate of return of 2034 1299 Project X1 ...View the full answer
