Consider the following projects with a cost of capital = 14%:

Year Project M Project T?

0 -$250,000 -$320,000

1 150,000 110,000

2 100,000 150,000

3 70,000 170,000

what does the IRR specifically measure? What is the IRR for each project? Which

project(s) are acceptable based on IRR? Can IRR accurately distinguish between mutually

exclusive projects (if so, which project would you choose)? What is the biggest strength of IRR?