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7. The following table shows the cash flows of two projects from year 0 to year 4. Project A Project B Year 0 Year 1
7. The following table shows the cash flows of two projects from year 0 to year 4. Project A Project B Year 0 Year 1 Year 2 Year 3 Year 4 -100 50 50 50 50 -135 60 80 60 50 Please finish the following tasks: (a) Solve the IRR of EACH project (3 points) (b) Solve the NPV of EACH project when required return is 15% (3 points) (c) Solve the NPV of EACH project when required return is 30% (2 points) (d) Solve the crossover rate for the two projects (5 points) (e) Explain how to use the crossover rate to choose the better project, when Project A and Project B are mutually exclusive to each other. (3 points) (f) List the advantages and disadvantages of using IRR to make capital budgeting decisions, especially when compared to using NPV. (4 points)
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