(a) To use the IRR criterion, what assumption must be made in comparing a set of mutually exclusive investments with unequal service lives?

(b) With the assumption made in part (a), determine the range of MARRs which will indicate that project A1 should be selected.

7.50 Consider the following two mutually exclusive investment projects: 0 Net Cash Flow Project A1 Project A2 -$10,000 -$15,000 $5,000 $20,000 $5,000 $5,000 1 2 3