1. A project that provides annual cash flows of $3,100 for nine years costs $10,400 today.
   1. At a required return of 12 percent, what is the NPV of the project?
   2. Would you accept or reject the project, why?
   3. What is the profitability index?
   4. Interpret the profitability index number.
   5. At what discount rate are you indifferent between accepting or rejecting the project? (Hint, you need the discount rate that makes the NPV of the project = 0, which is the IRR of the project.

1. MKG, LLC, has identified the following two mutually exclusive projects:

Year	Cash Flow (A)				Cash Flow (B)
0		$	68,000			$	68,000
1			44,000				30,200
2			38,000				34,200
3			25,000				40,000
4			15,600				24,200

1. What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept?
2. Assume the required return is 14%. What is the NPV for each of these projects? Which project will you choose if you apply the NPV decision rule?
3. Over what range of discount rates would you choose Project A? Over what range of discount rates would you choose Project B? At what discount rate are you indifferent between the 2 projects?