Consider the following two mutually exclusive investments: Investment T=0 1 2 3 4 Cash flows A $455,000 58,000 85,000 85,000 572,000

Cash flows B $65,000 31,000 28,000 25,000 19,000

a. Calculate IRRs on both investments. b. Find the cross over rate.

c. Draw the graph, showing how NPVs of these projects depend on their discount rates.

d. Describe which investment you prefer and in which circumstances