A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows:

Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent.

A. Project M: $ ______

B. Project N: $_______

Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.

A. Project M: _____%

B. Project N: _____%

Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.

A. Project M: ____%

B. Project N: ____%

Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.

A. Project M: ____________ years

B. Project N: ____________ years

Calculate discounted payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.

A. Project M: ___________ years

B. Project N: ___________ years

1. Assuming the projects are independent, which one(s) would you recommend?

   -Only Project M would be accepted because NPV(M) > NPV(N). -Only Project N would be accepted because NPV(N) > NPV(M). -Both projects would be accepted since both of their NPV's are positive. -Only Project M would be accepted because IRR(M) > IRR(N). -Both projects would be rejected since both of their NPV's are negative.

2. If the projects are mutually exclusive, which would you recommend?

   -If the projects are mutually exclusive, the project with the highest positive NPV is chosen. Accept Project N. -If the projects are mutually exclusive, the project with the highest positive IRR is chosen. Accept Project M. -If the projects are mutually exclusive, the project with the highest positive MIRR is chosen. Accept Project M. -If the projects are mutually exclusive, the project with the shortest Payback Period is chosen. Accept Project M. -If the projects are mutually exclusive, the project with the highest positive IRR is chosen. Accept Project N

3. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

1 1 2 3 Project M Project N $18,000 $6,000 $6,000 $6,000 $6,000 $6,000 $54,000 $16,800 $16,800 $16,800 $16,800 $16,800