1. Consider the four projects with cash flows as shown. Before proceeding to the questions, we will need to obtain FV for each project by using

MARR = 10%, 20%.

Project	n:0	1	2	3
A	-1,000	900	500	100
B	-1,000	600	500	500
C	-2,000	900	900	800
D	+1,000	-402	-402	-402

a) Explain why the FV criterion prefers A over B at 20% when it prefers B over A at 10%. With MARR = 10%, how much money would you have at time 3 if you invested $1,000 of your own money in A? In B?

b) Which of the following situations would you prefer? MARR = 10%; you invest $1,000 in B. MARR = 20%; you invest $1,000 in A. Explain your answer.

c) With MARR =10%, how much money would you have at time 3 if you invested $2,000 of your own money in C?

d) Explain why the FV criterion prefers A over C at 10%, even though in situation d the cash at time 3 is greater than that in situation b (for project A).

e) What is the IRR for D? Would you accept D with MARR = 20%? How would you modify the IRR acceptance rule when examining project D?

f.) Suppose A and B are mutually exclusive projects. Which project would you select using MARR of 10% and the IRR criterion?