Do C3 partConsider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent. YearDeepwater FishingNew Submarine Ride 0−$1,000,000 −$1,950,000 1 420,000 1,000,000 2 550,000 850,000 3 470,000 850,000 a-1.Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-2.Based on the IRR, which project should you choose? multiple choice 1 Deepwater Fishing Submarine Ride b-1.Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2.Based on the incremental IRR, which project should you choose? multiple choice 2 Submarine Ride Deepwater Fishing c-1.Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c-2.Based on the NPV, which project should you choose? multiple choice 3 Deepwater Fishing Submarine Ride c-3.Is the NPV decision consistent with the incremental IRR rule? multiple choice 4 Yes No Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent.Deepwater INew Submarine Ride1,000,000420,000Year0 -$-$1,950,0001,000,000850,000850,0001550,000470,0003а-1.Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)а-2.Based on the IRR, which project should you choose?multiple choice 1Deepwater FishingSubmarine Rideb-1.Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2.Based on the incremental IRR, which project should you choose?multiple choice 2Submarine RideDeepwater Fishingс-1.Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)с-2.Based on the NPV, which project should you choose?multiple choice 3Deepwater FishingSubmarine Rideс-3.Is the NPV decision consistent with the incremental IRR rule?multiple choice 4YesNo

Question

Do C3 partConsider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent.        YearDeepwater FishingNew Submarine Ride   0−$1,000,000 −$1,950,000 1 420,000  1,000,000 2 550,000  850,000 3 470,000  850,000                            a-1.Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)                                        a-2.Based on the IRR, which project should you choose?           multiple choice 1          Deepwater Fishing    Submarine Ride                         b-1.Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)                                               b-2.Based on the incremental IRR, which project should you choose?          multiple choice 2          Submarine Ride    Deepwater Fishing                  c-1.Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)                                        c-2.Based on the NPV, which project should you choose?           multiple choice 3          Deepwater Fishing    Submarine Ride                  c-3.Is the NPV decision consistent with the incremental IRR rule?         multiple choice 4          Yes     No Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent.Deepwater INew Submarine Ride1,000,000420,000Year0 -$-$1,950,0001,000,000850,000850,0001550,000470,0003а-1.Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)а-2.Based on the IRR, which project should you choose?multiple choice 1Deepwater FishingSubmarine Rideb-1.Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2.Based on the incremental IRR, which project should you choose?multiple choice 2Submarine RideDeepwater Fishingс-1.Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)с-2.Based on the NPV, which project should you choose?multiple choice 3Deepwater FishingSubmarine Rideс-3.Is the NPV decision consistent with the incremental IRR rule?multiple choice 4YesNo

Accepted Answer

The net present value (NPV) is a capital budgeting technique that helps to evaluate the…

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent.

Year	Deepwater Fishing	New Submarine Ride
0	−$	1,000,000	−$	1,950,000
1		420,000		1,000,000
2		550,000		850,000
3		470,000		850,000




a-1.	Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)





a-2.	Based on the IRR, which project should you choose?

	multiple choice 1

Deepwater Fishing
Submarine Ride



b-1.	Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)






b-2.	Based on the incremental IRR, which project should you choose?

	multiple choice 2

Submarine Ride
Deepwater Fishing


c-1.	Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)





c-2.	Based on the NPV, which project should you choose?

	multiple choice 3

Deepwater Fishing
Submarine Ride


c-3.	Is the NPV decision consistent with the incremental IRR rule?

	multiple choice 4

Yes
No