For the following two mutually-exclusive projects, use Excel to find the net present value (NPV), internal rate of return (IRR), and the profitability index (PI). Assume the cost of capital (discount rate) is 8%. Which project should be accepted? Is there a conflict between NPV and IRR? If the discount rate is 12%, is there a conflict between NPV and IRR? Which project should be accepted if the discount rate is 12%?

Graph the NPV profile for both projects. What is the crossover point (i.e., at what rate do the two projects have the same NPV)?

Year: Project A Cash Flows: Project B Cash Flows:

0 ($14,000) ($14,000)

1 $6000 $3000

2 $5000 $3000

3 $5000 $5000

4 $2000 $5000

5 $2000 $6000

Please use Excel to solve