Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%.

	0		1		2		3		4
Project A	-1,150		650		320		270		390
Project B	-1,150		250		255		420		840

What is Project As IRR? Do not round intermediate calculations. Round your answer to two decimal places.

%

What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places.

%

If the projects were independent, which project(s) would be accepted according to the IRR method?

(NEITHER, PROJECT A, PROJECT B, BOTH)-Select-NeitherProject AProject BBoth projects A and BCorrect 1 of Item 3

If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method?

(NEITHER, PORJECT A, PROJECT B, BOTH)-Select-Neither Project AProject BBoth projects A and BCorrect 2 of Item 3

Could there be a conflict with project acceptance between the NPV and IRR approaches when projects are mutually exclusive?

(YES, NO)-Select-YesNoCorrect 3 of Item 3

The reason is

(THE NPV AND IRR USE THE SAME REINVESTMENT RATE ASSUMPTION AND SO BOTH APPORAHCES REACH THE SAME PROJECT, THE NPV AND IRR USE DIFFERENT REINVESTMENT RATE ASSUMPTION AND SO THEY CAN BE A CONFLICT IN PROJECT ACCEPTENCE)

Reinvestment at the (IRR, WACC) is the superior assumption, so when mutually exclusive projects are evaluated the (NPV, IRR) approach should be used for the capital budgeting decision.

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capical budget, and you have been asked to do the analyis, Both projecta' after-tar conh fowr are ind the time line below, Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash nows, Asch projects have tyear ives, and ther hure : characteristics similar to the firm's average project. Bellinger's WACC is 1216. What is Project A's IRR? Do not round intermediate calculations. Round your answer to two decinal places. What is Project Bs 198? Do not round intermedlate calculations. Round your answer to two decmal places: If the projects were independent, which project(s) would be accepted according to the ERR methed? If the projects were mutuall exdusive, which project(e) would be accepted according to the 1RR method? Couid there be a confict with peoject acceptance between the NPV and teR asprosches when projects are mutially exclusive? The reason is Reinvestment at the is the superior assumptiony so when mulually exclusive poojects are cribuated the