Present value of $1

Periods

4%

6%

8%

10%

12%

14%

1

0.962

0.943

0.926

0.909

0.893

0.877

2

0.925

0.890

0.857

0.826

0.797

0.769

3

0.889

0.840

0.794

0.751

0.712

0.675

4

0.855

0.792

0.735

0.683

0.636

0.592

5

0.822

0.747

0.681

0.621

0.567

0.519

6

0.790

0.705

0.630

0.564

0.507

0.456

7

0.760

0.665

0.583

0.513

0.452

0.400

8

0.731

0.627

0.540

0.467

0.404

0.351

9

0.703

0.592

0.500

0.424

0.361

0.308

10

0.676

0.558

0.463

0.386

0.322

0.270

Present value of an Annuity of $1

Periods

4%

6%

8%

10%

12%

14%

1

0.962

0.943

0.926

0.909

0.893

0.877

2

1.886

1.833

1.783

1.736

1.690

1.647

3

2.775

2.673

2.577

2.487

2.402

2.322

4

3.630

3.465

3.312

3.170

3.037

2.914

5

4.452

4.212

3.993

3.791

3.605

3.433

6

5.242

4.917

4.623

4.355

4.111

3.889

7

6.002

5.582

5.206

4.868

4.564

4.288

8

6.733

6.210

5.747

5.335

4.968

4.639

9

7.435

6.802

6.247

5.759

5.328

4.946

10

8.111

7.360

6.710

6.145

5.650

5.216

Durrel Company is considering two different modifications to its current manufacturing process. The after-tax cash flows associated with the two investments are as follows:

Year

Project A

Project B

0

$(220,000)

$(220,000)

1

-

88,500

2

-

88,500

3

285,000

88,500

Durrel's cost of capital is 6%.

Required:

A. Compute the NPV for each investment and state which project should be chosen based on the NPV.

B. Compute the IRR for each investment and state which project should be chosen based on the IRR.