FOR THE NEXT 6 QUESTIONS. Consider the following mutually exclusive projects. Cost of capital for both projects is 12.50%.

Year	Project X	Project Y
0	-$100,000	-$100,000
1	20,000	74,000
2	40,000	55,000
3	85,000	42,000
4	120,000	40,000

On spreadsheet, calculate NPV and IRR. Copy over your solutions into the table below. Caution, you must calculate both metrics for both projects correctly to earn a credit.

	Project X	Project Y
NPV
IRR

On spreadsheet, calculate PI and MIRR. Copy over your solutions into the table below. Caution, you must calculate both metrics correctly to earn a credit. Have your spreadsheet ready for inspection.

	Project X	Project Y
MIRR
PI

If the firms goal is to maximize the value of its investments, which project(s) should be selected, and why?

Project A. Its NPV is greater.

Project B. Its IRR is higher.

Both projects. Both have positive NPV.

Both projects. Both have IRR that is greater than the cost of capital.

None of the above is correct.

On spreadsheet, please construct the NPV profile of the two mutually exclusive projects. Label your graph completely, making sure that you identify the crossover rate as well as the IRR of the two projects. Afterward, copy over only your completed graph to the space below. Be sure to format your graph to fit the space.

On spreadsheet, calculate the crossover rate. Then write your result in the box below. Additional question! What is the significance of the crossover rate?

Crossover rate:

Significance of the crossover rate:

With your calculator (or spreadsheet), calculate the payback period for Project X only. Note: There might not be a spreadsheet function for this calculation.

2.85 days

2.47 days

3.85 days

None of the above