Question 3 (6 marks) a) Discuss the reasons why investors can make inconsistent decisions according to internal rate of return rule (IRR)? (2 marks) b) Consider two mutually exclusive projects with the following cash flows: Project C/FO C/F6 C/F1 $(41,215) $12,500 C/F2 $14,000 C/F3 C/F4 $16,500 $18,000 A B $(46,775) $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 B-A ? ? ? ? ? ? ? i. You are considering using the IRR approach to decide between the two mutually exclusive projects A & B. Complete the table above. How many potential IRRS could there be for (B-A)? And why. (2 marks) ii. If the discount rate for project A and B is 16%, and 15%, then what is the NPV for project A and B? Which project will you choose? And why. (2 marks) Round your answers to 2 decimal places. C/F5 $20,000 0