Which project should you choose

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Reference no: EM133432507

Question:

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 -$725,000 -$1,450,000

1 270,000 820,000

2 420,000 650,000

3 380,000 540,000

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

Reference no: EM133432507

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