3. The IRR decision rule compares the IRR to the required rate of return (also known as the discount or hurdle rate). Suppose we are analyzing 3 possible required rates of return: 5% 10% 15% 1 Based on the IRR decision rule, for each of the above 3 required rates of return, which do you conclude is the better project to invest in?

1 2 Year 3 0 4 1 5 2 6 3 7 4 8 5 9 Internal Rate of Return 10 IRR Guess O 11 IRR Guess 1 12 Net Present Value at Rate of... 13 5% 14 10% 15 15% B C Cash Flows Project A Project B S (15,000) S (15,000) S 4,600 S 10,000 S 4,600 S 15,000 S 4,600 S 20,000 S 4,600 S 10,000 S 4,600 S (50,000)