Chapman Corp is planning to invest in two mutually exclusive projects: expanding the parking structures and building a new swimming pool. The cash flows for the two projects are given below.

IRR

Parking Structure

-

120

20

40

100

85

IRR- 27.77%

Swimming Pool

-

100

50

110

IRR- 32.82%

A)

Define mutually exclusive projects.

B)

Find the NPV for these two projects at the following discount rates 0%, 10%, 23% and 27%.

C)

Carefully and neatly plot the NPV profile (i.e., plot NPV vs. discount rates in part B)

and explain which project should be chosen at each discount rate (0%, 10%, 23%, and 27%)and why? Note: I suggest you use MS Excel to produce the plot.

Also, please be sure to label the x- and y-axes as well as identify the points at which the curves cross the x- and y-axes