Reference no: EM132420797

Problem: Capital Health plans in evaluating two different methods for providing home health service on its members both methods involve contracting out for service and health outcome and revenue are not affected by the method chosen Therefore the increment cash flow for decision are all outflows .Method A year 0 300,000,year 1 66,000, year 2 66,000, year 3 66.000, year 4 ,66,000, year 5. 66,000 Method B, year 0 ,120,000, year one ,96, 000, year two 96,000, year three 96,000,year 4 ,96,000, year five 96,000.

Required:

Question 1: What is each alternative IRR?

Question 2: If the cost of the capital for both methods is 9 per cent which methods should be chosen and why