$6.$ Consider projects Alpha and Beta

Project C$0$ C$1$ C$2$ IRR$(\%)$

Alpha $-400,000+2$c$141,000+$c$2293,000$ IRR$=21$

Beta $-200,000+$c$1131,000+1$c$272,000$ IRR$=31$

The opportunity cost of capital is $8\%.$

Suppose you can undertake Alpha and Beta, but not both. Use the IRR rule to make the choice.

Hint; What's the incremental investment in Alpha