1. Michael and Russell Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $100 million on a large-scale integrated plant which will provide an expected cash flow stream of $16 million per year for 25 years. Plan B calls for the expenditure of $35 million to build a somewhat less efficient more labor-intensive plant which has an expected cash flow stream of $7 million per year for 25 years. The firm's cost of capital is 12-percent. 1. Compute each project's NPV and IRR II. Which project would you prefer according to IRR? Which project would you prefer according to NPV? III. Is there a conflict in the recommendations of NPV and IRR? If yes, how do you resolve this conflict? IV. Graph the NPV profiles for all the options under consideration V. At what cost of capital, the conflict between NPV and IRR disappears? 2. Kelly is working as a treasurer at Philadelphia, Inc. The company is evaluating three fruit gardens for juice processing facility. You are given the following set of cash flows. Year 0 1 2 A -$200,000 140,000 140,000 B -$400,000 260,000 260,000 -$200,000 150,000 120,000 Suppose the relevant discount rate is 12 percent a year. i. compute the IRR for each of three projects ii. Compute NPV for each of the three projects iii. If each project is independent, which project should be accepted on the basis of the profitability index rule? iv. If these projects are mutually exclusive, which project should be accepted on the basis of profitability index rule? Which one would you choose on the basis of NPV? Is it consistent with the NPV rule? v. Suppose budget for these projects is $600,000. Which projects should be selected