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Problem 2: VinaZ Ltd. has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$42,000 -$42,000 1 22,000 6,000

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Problem 2: VinaZ Ltd. has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$42,000 -$42,000 1 22,000 6,000 2 17,900 13,800 3 12,400 24,000 4 9,400 26,000 a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct? b. If the required return is 10 percent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule? c. Over what range of discount rates would the company choose project A? Project B? At what discount rate would the company be indifferent between these two projects? Explain by graph. aignto

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