Problem 4. (25 marks)

Your division is considering two projects. Its WACC is 10%, and the projects cash flows (in millions of dollars) would be as follows:

1. Calculate the projects NPVs, IRRs, regular paybacks, and discounted paybacks.

2. If the two projects are independent, which project(s) should be chosen?

3. If the two projects are mutually exclusive and the WACC is 10%, which project(s) should be chosen?

1 3 4 0 H - $30 -$30 2 + $10 $10 Project A Project B $5 $20 $15 $8 $20 $6