Question: Consider projects Alpha and Beta: Cash Flows ($) Project C 0 C 1 C 2 IRR (%) Alpha 395,000 261,000 180,989 8 Beta 191,000 141,000

Consider projects Alpha and Beta:

Cash Flows ($)
Project	C₀	C₁	C₂	IRR (%)
Alpha	395,000	261,000	180,989	8
Beta	191,000	141,000	72,000	9

The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice. (Hint: Whats the incremental investment in Alpha?) Which project did you choose?

a. Beta

b. Alpha

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