Showing all formulas used and not a financial calculator: 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.

Year Deepwater Fishing New Submarine Ride

$0-$$$875,000-$$$1,650,000$

$1330,000890,000$

$2480,000730,000$

$3440,000590,000$

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

$1)$ If your decision rule if to accept the project with the greater IRR, which project should you choose?

$2)$ Because you are fully aware of the IRR rule$$s scale problem, you calculate the incremental IRR for the cash flows. Based on your computation, which project should you choose?

$3)$ To be prudent, you compute the NPV for both projects. Which project should you choose? Is it consistent with the incremental IRR rule?