Consider two mutually exclusive R&D projects that Savage Tech is considering. Assume the discount rate for both projects is 13 percent.

Project A: Server CPU .13 micron processing project By shrinking the die size to .13 micron, the company will be able to offer serv CPU chips with lower power consumption and heat generation, meaning fas 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 project will lead to large cash flows later on.

Year Project A Project B

0 $745,000 $954,000

1 348,000 263,000

2 367,000 372,000

3 259,000 368,000

4 184,000 422,000

5 128,000 507,000

Complete the following table: (Do not round intermediate calculations. Enter the IR a percent. Round your profitability index (PI) answers to 3 decimal places, e.g., 32. and other answers to 2 decimal places, e.g., 32.16.)

Project A: NVP

Project B: NVP

Project A: IRR

Project B: IRR

Project A: PI

Project B: PI

What is the incremental IRR of investing in the larger project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Incremental IRR %