Two mutually exclusive projects A and B have IRRs of 15% and 20% respectively. The NPV profits of the two projects intersect at 12%. What is the IRR of the incremental project (A • B)?

An Ontario car dealer is expanding into the Maritimes by setting up a new dealership in the region on a plot of land that was purchased for $100,000 but has a current market value of $500,000. Capital gains are taxable at half the regular 40% tax rate of the dealership. How much of the initial investment in the setup of the dealership can be assigned to the plot of land to be used?

Answer rating: 100% (QA)

Answer 1 The IRR of the incremental project would be the discount rate that mak... View the full answer