IRR rule $($S$5\mathrm{.}3)$ Consider the following two mutually exclusive projects:

a$.$ Calculate the NPV of each project for discount rates of $0\%,10\%,$ and $20\%.$ Plot these on a graph with NPV on the vertical

axis and discount rate on the horizontal axis.

b$.$ What is the approximate IRR for each project?

c$.$ In what circumstances should the company accept project A$?$

d$.$ Calculate the NPV of the incremental investment $($B $-$ A$)$ for discount rates of $0\%,10\%,$ and $20\%.$ Plot these on your graph.

Show that the circumstances in which you would accept A are also those in which the IRR on the incremental investment is

less than the opportunity cost of capital.