Please answer all parts, thank you.

You are a financial analyst for Damon Electronics Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the required rate of return for each project is 12 percent. The projects expected net cash flows are as follows:

Expected Net Cash Flows

Year Project X Project Y

0 $(10,000) $(10,000)

1 6,500 3,500

2 3,000 3,500

3 3,000 3,500

4 1,000 3,500

A. Calculate each projects traditional payback period (PB), net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and discounted payback period (DPB).

B. Which project or projects should be accepted if they are i)independent and ii)mutually exclusive?

C. How might a change in the required rate of return produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 5 percent? (Hint: Plot the NPV profiles.)

D. Why does the conflict exist?