A college student wants to start a small-scale painting business during his off-school hours. He decided to purchase some used painting equipment. He has two mutually exclusive options: 1. Do most of the painting by himself by limiting his business to only residential painting jobs or 2. Purchase more painting equipment and hire some helpers to do both residential and commercial painting jobs. He expects option 2 will have a higher equipment cost but provide higher revenues as well. In either case, he expects to fold the business in three years when he graduated from college. The cash flows for the two alternatives are given as follows:

n	option1	option2
0	-$ 3000	-$12000
1	$1350	$4200
2	$1800	$6225
3	$1500	$6330

Using the spreadsheet functions

, A. Determine the IRR of each alternative.

B. Determine the incremental rate of return (break even value) by plotting the present worth of each alternative as a function of interest rate.

C. With project would he select at MARR 10% and justify using the plot.