Project 1

IRR on overall investment = 19%

First cost = 100000

Project 2

First cost = 175000

IRR on overall investment = 15%

IRR on increments of investment compared with projects 1- 9%

Project 3 First cost = 200000

IRR on overall investment = 18%

IRR on increments of investment compared with projects

1- 17%

2- 23%

Project 4

First cost = 250000

IRR on overall investment = 16%

IRR on increments of investment compared with projects

1- 12% 2- 17% 3- 13%

Project 5

First cost = 300000

IRR on overall investment = 17%

IRR on increments of investment compared with projects

1- 14% 2- 11% 3- 17% 4- 16%

The data can be interpreted in the following way: The IRR on the incremental investment between project 5 and project 4 is 16%. If all projects are independent and the company has at least $1 025 000 to invest, which projects should be undertaken if the MARR is 16%?

options:

5 only

1, 3, 4, and 5

3 and 5

3 only

3, 4 and 5