Consider the following projects, A and B, where the firm can only choose one. Project A costs $800 and has cash flows of $500 in each of the next 2 years. Project B costs $700 and generates cash flows of $450 and $300 for the next 2 years, respectively.

1. Sketch a net present value profile for each of these projects.
2. Which project should the firm choose if the cost of capital is 12%?
3. What if the cost of capital is 20%?
4. Show all calculations.

**Cost of Capital	Project A	Project B**
0%	$200	$50
5%	$160	$40
10%	$120	$30
15%	$80	$20
20%	$40	$10
25%	$0	$0