Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation. Bothe Projects require annual return of 18 percent.

Year          Deepwater Fishing      New Submarine Ride

0                 $-1,040,000                   $-2,030,000

1                  $460,000                      $1,080,000

2                 $582,000                       $890,000

3                $510,000                          $930,000

a-1. Compute the IRR for both Projects. (Dont round intermediate calculations. Enter your answers as a percent rounded 2 decimals)

Deepwater Fishing?

Submarine Ride?  

a-2. Based on the IRR, which project would you choose?

b-1. Calculate the Incremental IRR for the cash flows. ( Do not round intermediate calculation. Enter your answers as rounded 2 decimals and as a percent.)

Deepwater Fishing?

Submarine Ride?

b-2. Based on the Incremental IRR, Which project would you choose?

c-1. Compute the NPV for both project. (Do not round intermediate calculations. Enter your answers as a dollar and rounded 2 decimals.

Deepwater Fishing     $

Submarine Ride     $

c-2 Based on the NPV, which project should you choose?

c-3. Is the NPV decision consistent with the incremental IRR Rule?