NPV versus IRR Consider the following cash flows on two mutually exclusive projects

for the Bahamas Recreation Corporation $($BRC$).$ Both projects require an annual return

of $14$ percent.

As a financial analyst for the company, you are asked the following questions:

a$.$ If your decision rule is to accept the project with the greater IRR, which project

should you choose?

b$.$ Because you are fully aware of the IRR rule's scale problem, you calculate the incre$-$

mental IRR for the cash flows. Based on your computation, which project should

you choose?

c$.$ To be prudent, you compute the NPV for both projects. Which project should you

choose? Is it consistent with the incremental IRR rule?