Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these.

Time	Project A Cash Flows	Project B Cash Flows
0	-$300,000	-$405,000
1	-387,000	134,000
2	-193,000	134,000
3	-100,000	134,000
4	600,000	134,000
5	600,000	134,000
6	850,000	134,000
7	-180,000	0

1. Sketch the NPV profile for projects A & B.
2. Determine the crossover point for these projects NPV profiles.
3. Assuming a cost of capital of 14%, which of these projects should be accepted?
4. Under what conditions on the cost of capital should project B be preferred to project A?
5. If Project A and Project B are independent, which project should be undertaken?