Clovis Valve Corporation is trying to choose between two mutually exclusive projects below.

Year project A cash flows project B cash flows

0 -$24,000 -$3,800

1 10,000 2,000

2 10,000 2,000

3 10,000 2,000

Question A) If the company applies the NPV decision rule, which project should it take and why?

Question B) If the company applies the IRR decision rule, which project should it take and why?

Question C) If the borrowing cost is 8.75%, which project should it take and why?