Project Year 0 Year 1 Year 2 Year 3 Year 4 A -98 25 32 38 51 B -98 51 38 32 20

You are considering the following two projects and can take only one. Your cost of capital is 10.8%.

The cash flows for the two projects are as follows ($ million):

a. What is the IRR of each project?

b. What is the NPV of each project at your cost of capital?

c. You will be indifferent if the cost of capital is __%?

d. Given your cost of capital, which project would you choose?