Problem:
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
Play house -30 15 20 10.40%
Fort -80 39 52 8.60%
You can undertake only one project. If your cost of capital is 8%, use the incremental IRR rule to make the correct decision.