2. Your firm has estimated the following cash flows for two mutually exclusive

capital investment projects. The firm's required rate of return is 10%.

Year Project A Cash FlowProject B Cash Flow

0-$185,000-$410,000

155,000120,000

255,000120,000

355,000110,000

445,000110,000

545,00090,000

645,00060,000

1.What is the NPV of projects A and B?

2.Which project would you accept on the basis of NPV?

3.What is the IRR of projects A and B?

4.Which project would you accept on the basis of IRR?

5.Is there a conflict between the methods?

6. Which project(s) would you accept and why?

7. What would be your answer to 6 above if the projects were independent?

NOTE: PLEASE SHOW FORMULA IN EXCEL WITH THE ANSWERS