FOR NEXT TIME (CONTINUED) 3. You are in charge of considering the following two projects. Your firm can only do one of them and you have to decide which one to do. The projects have 4-year lives and their cash flows (in thousands) are given in the table. 78 61 32 2 3 4 Project A -5000 2500 2000 500 3300 Project B -4000 1000 3000 2000 700 The IRR of Project A is 24% and the IRR of Project B is 25%. The NPV of Project A is $1.555 million and the NPV of Project B is $1.369 million. a. What are the payback periods of the two projects? Projce tA-3 yrs Projet = 2 yers 20 3 b. Your underling suggests taking project B because it has the higher Internal Rate of Retum. What do you think? Explain your reasoning. TP 95