1. Garage Inc. has identified two mutually exclusive projects:

Year Cash Flow Project A Cash Flow Project B

0 -$29,000 -$29,000

1 14,400 4,300

2 12,300 9,800

3 9,200 15,200

4 5,100 16,800

1. What is the IRR for each of these projects? Using the IRR decision rule, which should we accept? Is this necessarily the correct decision?

2. If the required return is 11%, what is the NPV of each project? Which project should it choose using this rul

3. Over what range of discount rates would we choose Project A? Project B? At which rate would we be indifferent? Explain.