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NPV profile of two mutually exclusive projects. Moulton Industries has two potential projects for the coming year, Project B-12 and Project F-4. The two projects

NPV profile of two mutually exclusive

projects.

Moulton Industries has two potential projects for the coming year, Project B-12 and Project F-4. The two projects are mutually exclusive. The cash flows are listed in the following table:

Cash Flow

Project B-12

Project F-4

Year 0

$4,270,000

$3,850,000

Year 1

$2,050,000

$0

Year 2

$2,050,000

$990,000

Year 3

$2,050,000

$1,400,000

Year 4

$0

$1,980,000

Year 5

$0

$2,430,000

Draw the NPV profile of each project, and determine their crossover rate. If the appropriate hurdle rate is 8% for both projects, which project does Moulton Industries choose?

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