A.Consider Capital budgeting projectsAandBwhich yield the following cash flows over their five-years live. Thecost of capitalfor the project is 10%. Calculate the projects NPV.

Project A

Project B

Year

Cash Flow

Cash Flow

0

$-1000

$-1000

1

500

100

2

400

200

3

200

200

4

200

400

5

100

700

A.Calculate the project's NPV from each of project.

4 points

B. Which of these two projects should be undertaken if they are independent of each other?

2 points

C. Which of these two projects should be undertaken if they are mutually exclusive projects?

2 points

D. What is the payback period for each of these two projects?

2 points

6. Your best friend approaches you with a proposal to invest in a project with the flowing cash flow

Yearcash flow

0-800

15,000

2-5,000

What is this project's Modified internal rate of return?WACC 10%

4 points