Using the internal rate of return to compare investment opportunities Yvonne Tower has two alternative investment opportunities to evaluate. The first opportunity would cost $149,512.23 and generate expected cash inflows of $21,000 per year for 17 years. The second opportunity would cost $136,909.44 and generate expected cash inflows of $18,000 per year for 15 years. Ms. Tower has sufficient funds available to accept only one opportunity.

Required

a. Calculate the internal rate of return of each investment opportunity.

b. Based on the internal rate of return criteria, which opportunity should Ms. Tower select?

c. Identify two other evaluation techniques Ms. Tower could use to compare the investment opportunities.