4. The CFO of Hansen Solveig Textiles (HST) has just handed you the estimated cash flows for two proposed projects. Project NL involves adding a new item to the firm's fabric line, it would take some time to build up the market for this product, so the cash inflows would increase over time. Project AS involves an add-on to an existing line, and its cash flows would decrease over time. Both projects have 3 year lives because HST is planning to introduce an entirely new fabric at that time. Here are the net cash flow estimates (in thousands of dollars): Expected Net Cash Flows Year Project NL Project AS ($100) ($100) 10 70 50 50 3 80 20 2 Depreciation, salvage values, net working capital requirements, and tax effects are all included in these cash flows. The CFO also made subjective risk assessments of each project, and she concluded that the projects both have risk characteristics that are similar to the firm's average project. HST required rate of return is to percent. You must now determine whether one or both of the projects should de accepted. Hou are to answer the following questions: 2 3 TO 60 80 70 50 20 Depreciation, salvage values, net working capital requirements, and tax effects are all included in these cash flows. The CFO also made subjective risk assessments of each project, and she concluded that the projects both have risk characteristics that are similar to the firm's average project. HST required rate of return is 10 percent. You must now determine whether one or both of the projects should be accepted. You are to answer the following questions: 4 What is each project's IRR? (8) B According to IRR, which project or projects should be accepted if they are independent? (2) (2) 4 C Mutually exclusive? (12 Points)