Consider the following cash flows from two mutually exclusive projects for the Bahamas Recreation Company Both projects require a 16 percent annual return Year Deep Water Fishing New Submarine Cruise 0 $ 990 000 $ 1 930 000 1 410 000 980 000 2 542 000 840 000 3 460 000 830 000 a 1 Calculate the IRR for both projects (Do not round up intermediate calculations Enter your answers in percentages rounded to 2 decimal places, for example 32 16 ) IRR Deep Water Fishing submarine journey a 2 Which project should you choose according to the IRR submarine journey Deep Water Fishing b 1 Calculate incremental IRR for cash flows (Do not round up intermediate calculations Enter your answer as a percentage rounded to 2 decimal places, for example 32 16 ) Incremental IRR b 2 Which project should you choose based on incremental IRR submarine journey Deep Water Fishing c 1 Calculate NPV for both projects (Do not round up intermediate calculations and round your answers to 2 decimal places, eg 32 16 ) NBD Deep Water Fishing $ submarine journey $ c 2 Which project should you choose according to NBD submarine journey Deep Water Fishing c 3 Is the NPV rule consistent with the incremental IRR rule NO Yes

Question: Consider the following cash flows from two mutually exclusive projects for the Bahamas Recreation Company. Both projects require a 16 percent annual return. Year Deep

Consider the following cash flows from two mutually exclusive projects for the Bahamas Recreation Company. Both projects require a 16 percent annual return.

Year	Deep Water Fishing		New Submarine Cruise
0	−$	990.000	−$	1.930.000
1		410.000		980.000
2		542.000		840.000
3		460.000		830.000

a-1. Calculate the IRR for both projects. (Do not round up intermediate calculations. Enter your answers in percentages rounded to 2 decimal places, for example 32.16.)

	IRR
Deep Water Fishing	%
submarine journey	%

a-2. Which project should you choose according to the IRR?

submarine journey
Deep Water Fishing

b-1. Calculate incremental IRR for cash flows. (Do not round up intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places, for example 32.16.)

Incremental IRR %

b-2. Which project should you choose based on incremental IRR?

submarine journey
Deep Water Fishing

c-1. Calculate NPV for both projects. (Do not round up intermediate calculations and round your answers to 2 decimal places, eg 32.16.)

	NBD
Deep Water Fishing	$
submarine journey	$

c-2. Which project should you choose according to NBD?

submarine journey
Deep Water Fishing

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

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