Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.

0 1 2 3 4 Project A -950 550 370 220 360 Project B -950 150 305 370 810 What is Project As IRR? Do not round intermediate calculations. Round your answer to two decimal places.

% What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places.

% If the projects were independent, which project(s) would be accepted according to the IRR method?

A. Project A

B. Project B

C. Neither projects

If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method?

A. Project A

B. Project B

C. Neither projects

Could there be a conflict with project acceptance between the NPV and IRR approaches when projects are mutually exclusive?

yes or no

The reason is

A. The NPV and the IRR approaches use the same reinvestment rate assumption and so both approaches reaches the same project acceptance when mutually exclusive projects are considered

B. The NPV and the IRR approaches use different reinvestment rate assumption so there can be conflict in project acceptance when mutually exclusive projects are considered

Reinvestment at the (IRR or WACC) is the superior assumption, so when mutually exclusive projects are evaluated the approach should be used for the capital budgeting decision.