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    Incremental IRR rule

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    You work for an outdoor play structure manufacturing company and are trying to decide between two projects:

    Year End Cash Flows ( $thousands)

    Project 0 1 2 IRR
    _______________________________
    Playhouse -30 15 20 10.4%
    Fort -80 39 52 8.6%

    You can undertake only one project. If your cost of capitol is 8%, use the incremental IRR rule to make the correct decision.

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    https://brainmass.com/business/capital-budgeting/incremental-irr-rule-395301

    Solution Preview

    Please see attached file:
    You work for an outdoor play structure manufacturing company  and are trying to decide between two projects:

                                           Year End Cash Flows ( $thousands)

    Project              0        1          2      IRR
    _______________________________
    Playhouse       -30      15        20   ...

    Solution Summary

    Uses the incremental IRR rule to make the investment decision.

    $2.49

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