5% return

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments.

 

  Project X1 Project X2
Initial investment $ (112,000) $ (184,000)
Net cash flows in:    
Year 1 41,000 84,000
Year 2 51,500 74,000
Year 3 76,500 64,000

 
Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable. (Round your answers to 2 decimal places.)

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