Nimtendo wants to invest in the better alternative out of two mutually exclusive projects.

Project Mario involves a complete software overhaul it costs $24.8 million and it promises cash inflows of $7.2 million per year for the next 5 years.

Project Luigi involves a basic repair it costs $6.7 million and it promises cash inflows according to the table below.

Nimtendo has a 12% cost of capital, and the CEO insists on using IRR to make capital budgeting decisions.

1. Define IRR and establish the decision rule for Nimtendo.
2. Calculate IRR for each project. Indicate which project, if any, Nimtendo should select according to IRR.
3. Define NPV and establish the decision rule for Nimtendo.
4. In spite of the CEOs policy, the CFO has asked for a calculation of NPV for both projects using a 12% discount rate.
5. Calculate NPV for each project and indicate which project, if any, Nimtendo should select according to NPV.

be sure to show your work and explain your reasoning

Year	Cash inflows
	Project Mario	Project Luigi
1	$7,200,000	$1,750,000
2	$7,200,000	$1,840,000
3	$7,200,000	$1,950,000
4	$7,200,000	$2,100,000
5	$7,200,000	$2,400,000