Question

Project x1 $(96,000) Project x2 $ (152,000) Initial Investment Expected net cash flows in: Year 1 Year 2 Year 3 33.000 43,500 68,500 72,000 62,000 52,000 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whethe each project is acceptable. (Round your answers to 2 decimal places.) IRR Acceptable? Project X1 Project X2

Answer 1

Ans: To calculate Internal Rate of Return using Excel Functions (See attached screenshot):

Particulars	Project X1 (In $)	Project X2 (in $)
Initial Investment	(96,000)	(152,000)
Year 1	33,000	72,000
Year 2	43,500	62,000
Year 3	68,500	52,000
IRR as per attached Screenshot	20.79%	11.48%

Based on above we conclude that project X1 is preferred.

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