Consider the following cash flows on two mutually exclusive projects for the B$.$C$.$ Recreation Corporation $($BCRC$).$ Both projects require

an annual return of $14$ percent.

As a financial analyst for BCRC$,$ you are asked to answer the following questions:

a$-1.$ Calculate the IRR for both projects. $($Do not round intermediate calculations. Round the answer to $2$ decimal places. Omit $\text{'}\%\text{'}$

sign in your response.$)$

a$-2.$ If your decision rule is to accept the project with the greater IRR, which project should you choose?

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b$-1.$ Calculate the incremental IRR for the projects. $($Do not round intermediate calculations. Round the answer to $2$ decimal places.

Omit $\text{'}\%\text{'}$ sign in your response.$)$

Incremental IRR

$\%$

b$-2.$ Because you are fully aware of the IRR rule's scale problem, you calculate the incremental IRR for the cash flows. Based on your

computation, which project should you choose?

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