2. You are analyzing the following two mutually exclusive projects and have developed the following information. What is the crossover rate? 3. A proposed project lasts 3 years and has an initial investment of $500,000. The after tax cash flows are estimated at $120,000 for year 1, $240,000 for year 2, and $240,000 for year 3. The firm has a target debt/equity ratio of 0.6. The firms cost of equity is 15% and its cost of debt is 8%. The tax rate is 35%. What is the NPV of this project? (hint: remember that the D/E is saying that debt is 60% of equity. In other words, you need to find D/A and E/A for the appropriate weights using the formulas: D/E/(1+ D/E) =% or weight of debt and 1/(1+D/E) = % or weight of equity.) 5. Consider the following two mutually exclusive projects. Time Project A Project B 0 -$300 -$405 1 -$387 $134 2 -$193 $134 3 -$100 $134 4 $600 $134 5 $600 $134 6 $850 $134 7 -$180 $0 What is each projects MIRR with a cost of capital of 12%? Which project should be selected