Exact Answers ONLY---

1. E12-27ACalculate NPVequal annual cash inflows

Use the NPV method to determine whether Olde West Products should invest in the following projects:

Project Acosts $290,000 and offers seven annual net cash inflows of $63,000. Olde West Products requires an annual return of 14% on projects like A.

Project Bcosts $395,000 and offers ten annual net cash inflows of $71,000. Olde West Products demands an annual return of 10% on investments of this nature.

Requirement

What is the NPV of each project? What is the maximum acceptable price to pay for each project?

2. E12-28ACalculate IRRequal cash inflows

Refer to Olde West Products in E12-27A. Compute the IRR of each project and use this information to identify the better investment.