Provide an evaluation of two proposed projects, both with 5-year expected lives and identical initial outlays of $110,000. Both of thj4ese projects involve additions to Liburdis high highly successful hotel product line, and as a result, the required rate of return on both projects has been established at 12 percent. The expected free cash flows from each project are as follows:

	Project A	Project B
Initial outlay	-$110,000	-$110,000
Inflow year 1	20,000	40,000
Inflow year 2	30,000	40,000
Inflow year 3	40,000	40,000
Inflow year 4	50,000	40,000
Inflow year 5	70,000	40,000

In evaluating these projects, please respond to the following questions:

1. What would happen to the NPV and PI for each project if the required rate of return increased? If the required rate of return decreased?
2. How does a change in the required rate of return affect the projects internal rate of return?
3. What reinvestment rate assumptions are implicitly made by the NPV and IRR methods? Which one is better?