Question: Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 14 percent.

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 14 percent.

Year Deepwater New Sub

0-$955,000-$1,860,000

1375,000 910,000

2 514,000 805,000

3 425,000 760,000

Compute the IRR for both projects

Deepwater - 21.8

Submarine - 20.4

Calculate the incremental IRR for the cash flows

Incremental IRR 16.5%

Compute the NPV for both projects

Deepwater - $14,258

Submarine - $13,768

Where am I going wrong?

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