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Calculate the internal rate of return of each investment

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Reference no: EM132561817

Question - Velma and Keota (V&K) is a partnership that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a four-year useful life, will cost $12,532.68, and will generate expected cash inflows of $3,700 per year. The second investment is expected to have a useful life of three years, will cost $7,411.44, and will generate expected cash inflows of $3,300 per year. Assume that V&K has the funds available to accept only one of the opportunities.

Required -

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

b. Based on the internal rates of return, which opportunity should V&K select?

Reference no: EM132561817

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