Question

Two capital investments are under consideration. Excel has been used to calculate the internal rate of return for each, with the results below:

	A	B
1	-90,000	-90,000
2	32,000	29,000
3	25,000	26,000
4	26,000	24,000
5	24,000	24,000
6	27,000	19,000
7	15%	12%

If the company's hurdle rate is 14%, which of the following is true?

Group of answer choices

Only proposal A should be accepted.

Both proposal A and proposal B should be accepted.

Both proposal A and proposal B should be rejected.

Only proposal B should be accepted.

A capital investment under consideration requires an initial investment of $100,000. The asset purchased will be used for 5 years. Depreciation is computed using straight-line, with no residual value. Income from operations, depreciation expense, and net cash inflows for each of the five years is:

Year	Net cash inflows
1	$40,000
2	35,000
3	55,000
4	80,000
5	62,000

Which is the correct way to enter this information into an Excel spreadsheet to compute internal rate of return?

Group of answer choices

	A
1	-100,000
2	40,000
3	35,000
4	55,000
5	80,000
6	62,000

	A
1	40,000
2	35,000
3	55,000
4	80,000
5	62,000
6	100,000

	A
1	100,000
2	-40,000
3	-35,000
4	-55,000
5	-80,000
6	-62,000

	A
1	62,000
2	80,000
3	55,000
4	35,000
5	40,000
6	0

Answer 1

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