The restaurant chain, War in the Buffet, is considering two mutually exclusive projects in two different cities near the chain's founder.He has analyzed the projects and estimated the following cash flow streams:

YearCouncil BluffsOmaha

0-850,000-2,100,000

1480,0001,500,000

2430,000750,000

3320,000600,00

As the CFO, you have a discount rate of 15% and want to analyze the project and need to answer the following questions:

a.What are the IRR's of each?If you choose the projects based upon IRR, which do you choose?

b.Next, you perform an NPV analysis foreach project.What are the NPV's, and which project does NPV suggest you should choose?

c.Since you know the inherent problems with IRR, you decide to also do incremental IRR for the cash flows.What is the incremental IRR?

d.Complete NPV Profile for the two projectsand a chart.Which should you choose?