Baldwin Enterprises is considering investing in one of two capital investment opportunities and you have been asked to evaluate the two alternatives. The first investment opportunity costs $170,400 and will provide additional revenues of $35,000 for the next 7 years. The second investment opportunity costs $187,900 and will result in cost savings of $28,000 per year for the next 10 years.
Required:
What is the internal rate of return for each capital investment opportunity to the nearest whole percentage?
Which investment alternative is preferable given the information that is provided and why?
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