Please follow the directions below, in evaluating the following two 5-year projects for the Silva Corporation, based on these estimated net cash flows per year:

Project AProject B

Year 0$ (550,000)$ (550,000)

Year 1140,00080,000

Year 2140,00080,000

Year 3140,00080,000

Year 4140,000300,000

Year 5230,000200,000

REQUIRED:

a. For each of the two projects described below, please find the NPV, using a 7% cost for money . And on the basis of your 7% NPVs, decide which project should be undertaken, if only one of them can be chosen.

b. For each of the two projects above, please find the PI. And on the basis of your PIs, decide which project should be undertaken, if only one of them can be chosen.

c. Calculate the IRR for each project separately.

d. The actual WACC for Silva Corporation is18.56%. On that basis, and the IRRs you have calculated, please decide which project Silva's should accept and begin working on.