Mr. Clotz, the president of Mega Enterprises, has to make a choice between two possible investments:

Project	C0	C1	C2	IRR (%)
A	-400	+250	+300	23
B	-200	+140	+179	36

The opportunity cost of capital is 9%. Mr. Clotz is tempted to take B, which has the higher IRR.

1. Explain to Mr. Clotz why this is not the correct procedure.
2. Show him .how to adapt the IRR rule to choose the best project.
3. Show him that this project also has the higher NPV