You are evaluating the following two$$ projects:$($Click on the following icon in order to copy its contents into a$$ spreadsheet.$)$

$$Year$-$End Cash Flows$($$ thousands$)$

Project

$0$

$1$

$2$

X

negative $30$

$20$

$20$

Y

negative $80$

$40$

$60$

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

Question content area bottom

Part $1$

Fill in the incremental cash flows in the bottom row of the$$ chart:$($Round to the nearest$$ integer.$)$

$$Year$-$End Cash Flows$($$ thousands$)$

Project

$0$

$1$

$2$

X

negative $30$

$20$

$20$

Y

negative $80$

$40$

$60$

Incremental Cash Flow

$$

enter your response here

$$

enter your response here

$$

enter your response here

Part $2$

Find the incremental IRR and the IRR for the projects. Fill in the IRR for Project$$ X$,$ Project$$ Y$,$ and the incremental$$ IRR:$($Round to two decimal$$ places.$)$

$$Year$-$End Cash Flows$($$ thousands$)$

Project

$0$

$1$

$2$

IRR

X

negative $30$

$20$

$20$

$$

enter your response here$\%$

Y

negative $80$

$40$

$60$

$$

enter your response here$\%$

Upper Y minus Upper X

negative $50$

$20$

$40$

$$

enter your response here$\%$

Part $3$

Use the incremental IRR rule to decide between the two projects. $($Select from the$$ drop$-$down menus and round to two decimal$$ places.$)$

Project

$$

X

Y

should be taken on for discount rates below

$$

enter your response here$\%$ and Project

$$

X

Y

should be taken on for discount rates above

$$

enter your response here$\%.$ Neither project should be taken on for discount rates above

$$

enter your response here$\%.$

Note that you should also include the range in which it does not make sense to take either project.Note that you should also include the range in which it does not make sense to take either project.Note that you should also include the range in which it does not make sense to take either project.$)))$Projectshould be taken on for discount rates belowshould be taken on for discount rates below$\%$ and Project$\%$ and Projectshould be taken on for discount rates aboveshould be taken on for discount rates above$\%.$Neither project should be taken on for discount rates above$\%.$