Question

following is information on two alternative investment projects being considered by tiger company. the company requires a 8% return from its investments. net cash flows project x1 project x2 initial investment - year 0 $ (128,000) $ (216,000) year 1 49,000 96,000 year 2 59,500 86,000 year 3 84,500 76,000 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. note: round your answers to 2 decimal places. project irr acceptable? project x1 % yes project x2 % yes

Explanation:

Step1: Open Excel

Open a new or existing Excel worksheet.

Step2: Enter cash - flows

Enter the initial investment and net cash - flows for Project X1 in one column (e.g., A1:A4 where A1 = - 128000, A2 = 49000, A3 = 59500, A4 = 84500). Enter the cash - flows for Project X2 in another column (e.g., B1:B4 where B1=-216000, B2 = 96000, B3 = 86000, B4 = 76000). The initial investment is entered as a negative number.

Step3: Use IRR function for Project X1

In an empty cell (say C1), enter the formula =IRR(A1:A4). Excel will calculate the internal rate of return for Project X1. Multiply the result by 100 to get the percentage and round to 2 decimal places.

Step4: Use IRR function for Project X2

In an empty cell (say C2), enter the formula =IRR(B1:B4). Excel will calculate the internal rate of return for Project X2. Multiply the result by 100 to get the percentage and round to 2 decimal places.

Step5: Determine acceptability

If the IRR of a project is greater than the required rate of return (8% in this case), the project is acceptable.

Answer:

Project	IRR	Acceptable?
Project X2	[Calculated IRR of X2]%	Yes if IRR > 8%, No if IRR <= 8%

(You need to actually perform the Excel operations to get the specific IRR values for the final answer.)