Hyundai Motor America is a wholly owned subsidiary of Hyundai Motor Company, a South Korean automotive manufacturer. The company has total of 19 manufacturing plants globally and the U.S. plant is located in Montgomery Alabama.

Hyundai Motor America is currently considering two mutually exclusive projects: A or B. Suppose you are working for the company as a CFO. Today, you and your team need to evaluate the two projects and have to choose one of them.

The company has a land that can be used to build a new assembly line for its new model. You expect that this additional line will generate negative cash flows in the first two years but more positive cash inflows later. Alternatively, the company can construct a warehouse for rents expecting stable cash flows.

The projects expected net cash flows are as follows:

	Expected Net Cash Flows (M$)
Year	Project A (New assembly lines)	Project B (New warehouse)
0	-$600	-$400
1	-700	100
2	-400	100
3	100	100
4	200	100
5	300	100
6	500	100
7	500	100
8	700	100
9	700	100
10	700	100

Using the information in the table, solve the following questions.

1. Suppose that two projects are mutually exclusive. If you were told that each projects required rate of return was 5 percent, which project should be selected? If the required rate of return was 15 percent, what would be the proper choice? If the required rate of return was 25 percent, what would be the proper choice?
2. How does your answer 1 change if the two projects are independent? That is, if you were told that each projects required rate of return was 5 percent, which project should be selected? What if the required rate of return is 15% or 25%?