Garage, Inc., has identified the following two mutually exclusive projects:

Year	Cash Flow (A)				Cash Flow (B)
0	$	29,600			$	29,600
1		15,000				4,600
2		12,900				10,100
3		9,500				15,800
4		5,400				17,400

What is the IRR for each of these projects?

	IRR
Project A	%
Project B	%

Using the IRR decision rule, which project should the company accept?

	Project A
	Project B

Is this decision necessarily correct?

	Yes
	No

If the required return is 11 percent, what is the NPV for each of these projects?

	NPV
Project A	$
Project B	$

b-2

Which project will the company choose if it applies the NPV decision rule?

	Project A
	Project B

At what discount rate would the company be indifferent between these two projects?

Discount rate

%