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Problem 2 (30%) Consider the following two projects, project A and project B. Cash flows are given on the timeline below. WACC=12% for both projects.

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Problem 2 (30%) Consider the following two projects, project A and project B. Cash flows are given on the timeline below. WACC=12% for both projects. Find and interpret NPV for both projects, show calculations. Which project would you accept if they are independent? Which project would you accept if they are mutually exclusive? 0 1 A: 12% + -100 30 2 + 30 3 + 30 4 + 30 5 + 30 6 + 30 7 + 30 8 + 30 9 + 30 10 -1 30 3 6 10 0 1 12% B: H + -132 25 2 + 25 4 + 25 + 25 5 + 25 7 + 25 8 + 25 9 + 25 + 25 25

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