A3Q3 We have two mutually exclusive investments with the following cash flows:

Year	Investment A	Investment B
0	-$100	-$100
1	50	20
2	40	40
3	40	50
4	30	60

a. Using a financial calculator, calculate the IRR for each of the investments.

b. Based on the IRR rule and a required return of 15%, which investment should we choose?

c. Calculate the NPV profile for each investment, using the discount rates of 0%, 5%, 10%, 15%, 20%, and 25%. Perform this task in an Excel spreadsheet. Cautionary note: If you use the =NPV() function in Excel to calculate the NPVs, it will provide incorrect answers. The NPV() function actually calculates the present value of all cash inflows. The NPV should be calculated as =NPV(all cash inflows) initial cash outflow.

d. Plot the NPV profile for both projects using the X-Y scatter function in Excel.

e. If the required return on this project is 16%, would both NPV and IRR give us the same conclusion? Explain your answer.

f. If the required return on this project is 9%, would both NPV and IRR give us the same conclusion? Explain your answer.

h. Calculate the crossover rate at which we are indifferent between the two investments.