Alexs company has an investment opportunity (Project A) that requires a cash outlay of $12,000 today. They estimate that they will receive in exchange $4,000 in year 1, $5,000 in year 2, and $7,000 in year 3.

a) What is the IRR of Project A?

b) If the discount rate is 10%, would you invest in Project A?

c) Lets imagine that we had a second project (Project B) that has an IRR of 20%. If the crossover rate between these two projects is 11%, which project would you choose when the appropriate discount rate is below that crossover rate?