Inatech Is Contemplating Two Different Projects and Decides to Perform

question 52

Essay

Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative.Project A and B have the cash flows as shown and Inatech uses a required rate of return of 8%.Compute the internal rate of return for both projects to determine which is worth of funding. $$\begin{array} { | l | l | l | } \hline \text { Year } & \mathbf { A } & \mathbf { B } \\\hline 0 & - \$ 500,000 & - \$ 400,000 \\\hline 1 & \$ 260,000 & \$ 200,000 \\\hline 2 & \$ 170,000 & \$ 100,000 \\\hline 3 & \$ 125,000 & \$ 100,000 \\\hline 4 & \$ 75,000 & \$ 50,000 \\\hline 5 & \$ 25,000 & \$ 25,000 \\\hline\end{array}$$

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Definitions:

Domestic Price

The price of goods or services within a country's borders, typically influenced by local demand and supply.

Imported Wine

Wine brought into a country from another country for sale and consumption.

Quantity Imported

The total number of goods or services brought into a country from abroad for sale.

Import Quotas

Restrictions set by the government on the amount or monetary value of products allowed to be imported into a nation.