Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation. Both projects require an annual return of 18 percent.

Year	Deepwater Fishing			New Submarine Ride
0	$	1,035,000		$	2,020,000
1		455,000			1,070,000
2		578,000			885,000
3		505,000			920,000

a-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

	IRR
Deepwater Fishing	%
Submarine Ride	%

a-2. Based on the IRR, which project should you choose?

Submarine Ride

Deepwater Fishing

b-1. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Incremental IRR %

b-2. Based on the incremental IRR, which project should you choose?

Submarine Ride

Deepwater Fishing

c-1. Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Deepwater Fishing	$
Submarine Ride	$

c-2. Based on the NPV, which project should you choose?

Deepwater Fishing

Submarine Ride

c-3. Is the NPV rule consistent with the incremental IRR rule?

No

Yes

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