On May 11, 2021, the total market value of company "Bella Limited" is $40million dollars. In the beginning of the year, the company issued a ten-year bond with acoupon rate 12% that is currently trading at 1,125 dollars. The market ongoing rate ofinterest/discount rate was 8%. The CEO of the company is considering undertaking two solar projectsnamely, project "Lambda" that has a cost of $15,000 and is expected to produce benefits(e.g.,cashflows)of$5,000peryearforfiveyearsandproject"EPSILON"thatcosts $24,000and isexpected toproducecashflows of $6,500 peryear for fiveyears.

a.CalculatethetwoprojectsInternalRateofReturnand ProfitabilityIndices.

b.Whichprojectwouldbeselected,assumingthatareMutuallyExclusive,usingeachrankingmethod?

c.Discussindetailtheadvantagesanddisadvantagesofthe IRRcriterion.

d.Whichrankingcriterionisbetter IRRorNPV?Carefullyexplainyouranswer.