Problem 1 Madeleine Blanger company is considering Projects A and B with the following information:

Cashflows

Year	Project A	Project B
19X0	$4,000 (initial investment)	$4,000 (initial investment)
19X1	800	800
19X2	800	4800
19X3	4800	0

a. If Madeleine's cost of capital is 15 percent, rank the projects on the basis of the IRR criterion.

b. Why should Madeleine not choose between the projects on the basis of the IRR ranking determinated in a?

c.What general conclusion can be drawn from your explanation in part b?