1. Consider the two following mutually-exclusive projects

Year Project A Project B

0 - $100 -$100

1 20 40

2 50 45

3 70 50

If the firms cost of capital is 11%, which project(s) should you accept and why?

A) Project A because it has a higher IRR.

B) Project A because it has a higher NPV.

C) Project B because it has a higher NPV.

D) Project B because it has a higher payback

2. What is the NPV for a project costing $250,000 today and providing a net cash inflow of $89,000 annually for 4 years at an opportunity cost of capital of 9% per annum?

A) 12,577

B) 22,625

C) 29,333

D) 38,335

E) 288,335