Comparing Investment Criteria Consider the following cash fl ows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for AZ-Motorcars is 10 percent.

Year AZM Mini-SUV AZF Full-SUV 0 $200,000 $500,000 1 200,000 200,000 2 150,000 300,000 3 150,000 300,000

a. Based on the payback period, which project should be taken?

b. Based on the NPV, which project should be taken?

c. Based on the IRR, which project should be taken?

d. Based on this analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis. LO.1