CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 2 3 4 5 1 + + + Project M -$15,000 $5,000 $5,000 $5,000 $5,000 $5,000 Project N -$45,000 $14,000 $14,000 $14,000 $14,000 $14,000 a. Calculate NPV for each project. Round your answers to the nearest cent. Do not round your intermediate calculations. Project M $ 2165.40 Project N$ 3063.13 Calculate IRR for each project. Round your answers to two decimal places. Do not round your intermediate calculations. Project M 19.86 % Project N 16.80 % Calculate MIRR for each project. Round your answers to two decimal places. Do not round your intermediate calculations. Project M % Project N % Calculate payback for each project. Round your answers to two decimal places. Do not round your intermediate calculations. Project M 3 years Project N 3.21 years Calculate discounted payback for each project. Round your answers to two decimal places. Do not round your intermediate calculations. Project M 4.17 years Project N 4.57 years b. Assuming the projects are independent, which one(s) would you recommend? Both projects would be accepted since both of their NPV's are positive. c. If the projects are mutually exclusive, which would you recommend? If the projects are mutually exclusive, the project with the highest positive NPV is chosen. Accept Project N. d. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR? The conflict between NPV and IRR is due to the fact that the cash flows are in the form of an annuity. V