Question: Bahamas Recreation Corporation (BRC). Both projects require an annual return of 14 percent. As a financial analyst for BRC, you are asked the following questions:

Bahamas Recreation Corporation (BRC). Both projects require an annual return of 14 percent.

As a financial analyst for BRC, you are asked the following questions:
a. If your decision rule is to accept the project with the greater IRR, which project should you choose?
b. 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?
c. To be prudent, you compute the NPV for both projects. Which project should you choose? Is it consistent with the incremental IRRrule?

Year Deepwater Fishing New Submarine Ride S750,000 310,000 430,000 330,000 -$2,100,000 1.200,000 760.000 850,000

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