My client wants to develop an empty plot of land that the company just purchased. They can build either a convenience store or a restaurant, but not both. The cash flows are as follows:

Year. Convenience store Restaurant

0. -40,300 -41300

1. 19,100 6,300

2 17,800 14,200

3 15,200 17,900

5 8,400 30,300

a. What is the IRR for each of these projects? Using the IRR decision rule, which project should my client accept? Is this decision necessarily correct? Explain.

b. If the require return is 11%, what is the NPV for each of these projects? Which project will the company chose if it applies the NPV decision rule?