1. Consider the following two mutually exclusive projects with a required rate of return of 5%.

Project Kris Project Kringle

Year 0 -10,000 -10,000

Year 1 3,000 2,000

Year 2 3,000 2,500

Year 3 3,000 3,000

Year 4 3,000 3,500

Year 5 3,000 4,500

a. Find the payback period for both projects.

b. Find the NPV for both projects.

c. Find the IRR for both projects.

d. Find the crossover point.

e. Draw the NPV profile.

f. Which project do you recommend and why?