$1\mathrm{.}3\mathrm{.}6$ Recognize the Red Flag $($Scale$,$ Timing$)$; What Do You Do$?$

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Assume that you have to pick between two mutually exclusive projects, Projects A and B$.$ Identify the issue with using IRR in each of the following scenarios.

Scenario $1$:

Project A

Time $0$ Time $1$ Time $2$

$$(100)$ $$50$ $$150$

Project B

Time $0$ Time $1$ Time $2$

$$(10,000)$ $$6,000$ $$17,000$

Scenario $2$:

Project A

Time $0$ Time $1$ Time $2$ Time $3$

$$(1,000)$ $$50$ $$100$ $$1,500$

Project B

Time $0$ Time $1$ Time $2$ Time $3$

$$(1,000)$ $$1,200$ $$20$ $$125$