Consider the following mutually exclusive projects:

T=0

1

2

3

Project X:

-100

20

30

90

Project Y:

-100

80

30

20

a.Find IRRs for both projects.

b.Find the cross-over rate.

c.Construct a graph, where you will show the NPV of each project as a function of its discount rate (i.e NPV on the vertical axis and r on the horizontal axis). Both NPVs should be on the same graph. This graph is the NPV schedule.

d.Please describe as fully as possible which project is the best and under which circumstances.