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ZeeZee’s Construction Company has the opportunity to select one of four projects (A, B, C, or D) or the null (Do Nothing) alternative. Each project requires a single initial investment and has an internal rate of return as shown in the first table below. The second table shows the incremental IRR(s) for pairwise comparisons between each project and all other projects with a smaller initial investment.

Investments and IRR(s)

Project Initial Investment IRR
Null $0 0.0%
A $600,000 44.0%
B $800,000 40.0%
C $470,000 39.2%
D $540,000 36.0%

Incremental IRR(s)

Increment Incremental IRR
B-A 28.3%
B-D 48.8%
B-C 41.4%
A-D 116.5%
A-C 61.0%
D-C 18.4%

If MARR = 20% then project _______(A, B, C, D, Null)is preferred based on an incremental IRR analysis.

If MARR = 30% then project________(A, B, C, D, Null)is preferred based on an incremental IRR analysis.

If MARR = 40% then project________(A, B, C, D, Null)is preferred based on an incremental IRR analysis.

If MARR = 50% then project ________(A, B, C, D, Null)is preferred based on an incremental IRR analysis.

Assume MARR = 30%. Which project is preferred based on an incremental ERR analysis? _______(A, B, C, D, Null, not enough information)

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