3. Project Analysis (50 points). Project A has the following cash flows. The firm's required rate of return is 12% Expected After-tax net cash flows 5000 800 900 1500 1200 3200 Year a) What is the payback period? b) What is the NPV c) What is the discounted payback period? As discussed in the class, one primary drawback of payback period is the lack of consideration of value of time. To overcome this limitation, we can use the present values of the future cash flows to compute the discounted payback. To do so, we simply apply the concept of the traditional payback to the present values of the future cash flows. d) What is the internal rate of return? You may either use excel or use hand calculation. e The NPV profile of this project is shown below. Interpret the relationship between NPV and IRR Suppose that the firm is considering another project B with the following cash flows. Plot the NPV profile for both project A and B in excel. Discuss and interpret the graph with respect to using NPV and IRR to make investment decisions. What implications can you draw from the graph. (Suggestion: Find the crossover point) f) Expected After-tax net cash flows 5000 2400 1800 900 Year 700 g) Calculate the modified MIRR for both project A and B