provide excel formulas and an explanation.

You are given the following information of two projects planned by your company. The initial costs are given as: $3 million for project A, and $3.5 million for project B, respectively.

Table 1: (in thousands)

Project	Year 1	Year 2	Year 3	Year 4	Year 5
A	-450	1250	-350	2200	2500
B	360	952	400	875	2250

Answer the following questions.

a) Suppose the actual cost of capital is 12%. What are the Net Present Values for these two projects?

b) Suppose the financial manager discovered that if we postponed the project B to two years later, the cost of capital could be 10% due to possible low future interest rates. However, the deferment may cost the firm additional $0.5 million to restart the facilities and the initial cost must be spent now, instead of two years later. Will you recommend waiting for additional 2 years to start?

c) Let the corporate income tax rate be 30%, the cost of debts be 6%, the cost of equity be 25% and there is no preferred stock issued by the firm. What is the debt-to-equity ratio for your company?