Carlos O'Malley's, a popular Mexican restaurant, is outgrowing its current setting and needs

to expand. Two mutually exclusive expansion projects are being considered: Project $1($a new

location$)$ and Project $2($remodeling the existing location$).$ Details about the two projects are given

in the table below. Each project will last into the indefinite future and, thus, can be considered a

perpetuity. Assuming that Carlos has a weighted average cost of capital of $10\%,$ answer the

following questions. $(10$ Points$)$

a$.$ What is the NPV of each project?

Project $1NPV=$

b$.$ What is the IRR of each project? $[$Hint: Think the "definition" of IRR, then solve for it$.]$

c$.$ Suppose the goal of Carlos O'Malley's is maximize firm value. If the projects are mutually

exclusive, which project should Carlos O'Malley's choose? Explain why.

d$.$ If the projects were not mutually exclusive, how would your answer to part $($c$)$ change?