Assume that MAR = 15% and a financing rate of 12% Use incremental IRR analysis and assume that the Do Nothing alternative is not available. Replace the $2,000 value in year 2 of Project 3 with $2,465 and the column labeled 2 in Table 2. On the basis of the IRR criterion, if the three projects are mutually exclusive investments, which project should be selected?

n 0 1 | 2 Project 1 $1,500 $700 $2,500 Net Cash Flow Project 2 $5,000 $7,500 Project 3 $2,200 $1,600 $2,000 $600