Question: You are considering the following two mutually exclusive projects. Use the incremental IRR to determine the range of discount rates for which each project is

You are considering the following two mutually exclusive projects.

You are considering the following two mutually exclusive projects. Use the incremental

Use the incremental IRR to determine the range of discount rates for which each project is optimal to undertake. Note you should also include the range in which it does not make sense to take either project.

a. What is the incremental IRR?

b. What is the range of discount rates Alpha is the optimal project to take?

c. What is the range of discount rates Beta is the optimal project to take?

d. What is the range of discount rates neither project is optimal to take?

0 Year Alpha Beta -5,100 -5,100 1 2,700 1,100 2 2,500 2,300 3 1,600 3,700

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