Question
You work for an outdoor play structure manufacturing company and are trying to decide between the following two projects: Year-End Cash Flows ($ thousands) Project
You work for an outdoor play structure manufacturing company and are trying to decide between the following two projects:
| Year-End Cash Flows ($ thousands) | ||||
| Project | 0 | 1 | 2 | IRR |
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|
|
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| Playhouse (minor project) | 29 | 18 | 19 | 17.7% |
| Fort (major poject) | 77 | 39 | 51 | 10.6% |
You can undertake only one project. If your cost of capital is 6%, use the incremental IRR rule to make the correct decision.
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