2. Net Cash Flows and NPVs for different discount rate for projects S and L are given below (35 points)

	Net Cash Flows ($)			Discount Rate (%)	NPVS	NPVL
Year (t)	Project S	Project L		0%	$800	$1100
0	$(3000)	$(3000)		5	454.85	554.32
1	1500	400		10	161.33	108.59
2	1200	900		15	(90.74)	(259.24)
3	800	1300		20	(309.03)	(565.97)
4	300	1500		25

a) Calculate the discounted payback period in years at 10% for the Project S and Project L (5 points)

i) Payback for Project S:

ii) Payback for Project L:

b) Calculate NPV_S for 25% and NPV_L for 25%. Fill the table (5 points)

i) NPV_S at 25%:

ii) NPV_L at 25%:

c What is the IRR for S? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR (5 points)

Equation:

Answer:

d) What is the IRR for L? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR (5 points)

Equation:

Answer:

e) What is the cross-over rate? (Write down the equation for cross-over rate and then Use an excel worksheet to calculate IRR (5 points)

Equation:

Answer:

g) If projects are mutually exclusive, which project would you accept? (5 points)

i) at 10%

ii) at 25%

f) If projects are independent (not mutually exclusive), which project(s) would you accept? (5 points)

i) at 10%

ii) at 25%