Question: (b) Consider two independent projects: Project C & Project D, both are pure investment projects. Sup- pose Project C has a unique IRR, IRRC, and

(b) Consider two independent projects: Project C & Project D, both

(b) Consider two independent projects: Project C & Project D, both are pure investment projects. Sup- pose Project C has a unique IRR, IRRC, and Project D has two IRRS, IRRDI&IRRp2. (i) (2p) There is a logical contradiction in the problem description (b) above, identify and explain the contradiction. (ii) (4pt) Suppose Project D is not a pure investment project and indeed has two IRRs. Morcover, IRRDI > IRRC > IRRD2. Which project should be chosen according to the IRR rule? (iii) (4pt) Which problem of IRR, if any, does this example reveal? (b) Consider two independent projects: Project C & Project D, both are pure investment projects. Sup- pose Project C has a unique IRR, IRRC, and Project D has two IRRS, IRRDI&IRRp2. (i) (2p) There is a logical contradiction in the problem description (b) above, identify and explain the contradiction. (ii) (4pt) Suppose Project D is not a pure investment project and indeed has two IRRs. Morcover, IRRDI > IRRC > IRRD2. Which project should be chosen according to the IRR rule? (iii) (4pt) Which problem of IRR, if any, does this example reveal

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