14.3. Capitol Healthplans, Inc., is evaluating two different methods for

providing home health services to its members. Both methods involve contracting out for services, and the health outcomes and revenues are not affected by the method chosen. Therefore, the incremental cash flows for the decision are all outflows. Here are the projected flows: (Check Picture)

a. What is each alternatives IRR?

b. If the cost of capital for both methods is 9 percent, which

method should be chosen? Why?

Please show step by step solutions and formula.

3. Capitol Healthplans, Inc., is evaluating two different methods for providing home health services to its members. Both methods involve contracting out for services, and the health outcomes and revenues are not affected by the method chosen. Therefore, the incremental cash flows for the decision are all outflows. Here are the projected flows: a. What is each alternative's IRR? b. If the cost of capital for both methods is 9 percent, which method should be chosen? Why