Aluminum Building Products Company (ABPC) is considering investing in either of the two mutually exclusive projects described as follows: Project 1. Buying a new set of roll-forming tools for its existing roll forming line to introduce a new cladding product. After its introduction, the product will need to be promoted. This means that cash inflows from additional production will start sometime after and will gradually pick up in subsequent periods. Modifying its existing roll-forming line to increase productivity of its available range of cladding products. Cash inflows from additional production will start immediately and will reduce over time as the products move through their life cycle.

Sarah Brown, project manager of ABPC, has requested that you do the necessary financial analysis and give your opinion about which project ABPC should select. The projects have the following net cash flow estimates:

Year	Project 1	Project 2
0	($200,000)	($200,000)
1	0	90,000
2	0	70,000
3	20,000	50,000
4	30,000	30,000
5	40,000	10,000
6	60,000	10,000
7	90,000	10,000
8	100,000	10,000

Both these projects have the same economic life of eight years and average risk characteristics. ABPCs weighted average cost of capital, or hurdle rate, is 7.2 percent. Complete the project using Excel spreadsheet.

What are the IRRs of each project? Which project should be chosen using IRR as the selection criterion?