Question: Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation. Both projects require an annual return of 16% Year Deepwater

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation. Both projects require an annual return of 16%

Year Deepwater Fishing New Submarine Ride

0 -$985,000 -$1,920,000

1 405,000 970,000

2 538,000 835,000

3 455,000 820,000

a-1. Compute the IRR for both projects (do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places).

a-2 Based on the IRR, which one should you choose?

b-1. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places)

b-2. Based on the incremental IRR, which project should you choose?

c-1. Compute the NPV for both projects.(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places)

c-2. Based on NPV which project should you choose?

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