Project A has an initial investment of $11,000, and generates positive cash flows of $4,000 each year for the next six years. Project B has an initial investment of $17,000, and generates positive cash flows of $4,500 each year for the next six years. Assume the discount rate is 13%.

NPV

			Enter the NPV function. Be sure to properly account for the initial cost!
	Using the NPV criteria answer these questions.
	Enter the IRR function. Using the IRR criteria.

Project A

Project B

Project selected if A and B are mutually exclusive:

Project(s) selected if A and B are indpendent:

IRR

Project A

Project B

Using IRR for your decision, which project would you select if A and B are mutually exclusive:

Would your answer change if the two projects are independent instead of mutually exclusive?

Project C was added to the potential capital budgeting list at the last minute as a mutually exclusive alternative to Project B. C has an initial investment of $17,000, and generates positive cash flow of $37,500 in year six; note years 1 through 5 have NO CASH FLOWS. Assume the discount rate is 13%.

NPV

Project B

			Enter the NPV function. Be sure to properly account for the initial cost! The value in the yellow cell will fill automatically from the results above.
	Using the NPV criteria answer these questions.
				Enter the IRR function. Yellow cell will fil automatically.

$0.00

Project C

Project selected if B and C are mutually exclusive:

IRR

					Using the IRR criteria.
	Because Projects B and C are mutually exclusive, would you recommend that Project B or Project C be added to the capital budget for this year? Explain your answer here:

Project B

0%

Project C

Project selected if B and C are mutually exclusive: