Consider two mutually exclusive R&D projects that Savage tech is considering. assume the discount rate for both projects is 11 percent

Project A

Server CPU .13 micron processing project by shrinking the die size to .13 micron, the company will be able to offer server CPU chips with lower power consumption and heat generation, meaning faster CPUs

Project B New telecom chip project

Entry into this industry will require introduction of a new chip for cell phones. The know how will require a large amount of up front capital but success of the project will lead to large cash flows later on

Year. Project A. Project B

O. -$675000. -877000

1. 334,000. 249000

2. 346,000. 351000

3. 252,000. 354000

4. 177000. 401000

5. 114000. 486000

Complete the following table

PROECT A. Project B

NPV

IRR. %. %

PI

What is the increments IRR of investing in the larger project?

Incremental project ......... %