Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)

Finance Mar 08, 2021

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15 percent.

(Year) Deepwater Fishing - New Submarine Ride (0) −$975,000 −$1,900,000 (1) - 395,000 - 950,000 (2) 530,000 - 825,000 (3) 445,000 - 800,000

How do you compute the IRR for both projects?

How do you calculate the incremental IRR for the cash flows?

How do you compute the NPV for both projects?

Expert Solution

Based on NPV Deepwater fishing would be selected as it has higher NPV.

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