Two mutually exclusive projects offer the following cash flows at year 0 and 1,
Project X: -240 (year 0) and 580 (year 1),
Project Y: -10,060 (year 0) and 11,010 (year 1).
Calculate an incremental IRR of doing project Y and on that basis decide which project is preferable if the appropriate hurdle rate for each project is 8%. Choose the correct answer.
A. incremental IRR = 6.21% so that project Y should be