Consider the following two projects: Net Cash Flow Each Period

Initial Outlay	1	2	3	4
Project A $4,000,000	$2,003,000	$2,003,000	$2,003,000	$2,003,000
Project B $4,000,000	0	0	0	$11,000,000

a.	Calculate the net present value of each of the above projects, assuming a 14 percent discount

rate.

b.	What is the internal rate of return for each of the above projects?

c.	Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b

above.

d.	If 14 percent is the required rate of return, and these projects are independent, what decision

should be made?

e.	If 14 percent is the required rate of return, and the projects are mutually exclusive, what

decision should be made?