Question 1 (25 points): An investor has two investment alternatives, Project A and Project B, that are mutually exclusive. Other investment opportunities also exist at 10% minimum rate of return. Cash flows for Project A and B are as follows. Which project is a better investment on the basis of NPV and IRR analysis? It is recommended that one apply incremental analysis techniques. Project A: C=-5,000 C=-3,500 0 1 C=-2,500 "1=3,000 1=3,000 1=3,000 1=2,500 1=2,500 1=2,500 I=3,000 2 3 4 5 6 7 8 L=$8,500 Year Project B: L=$11,000 C=-15,000 C=-4,000 '1=4,250 1=4,000 1=3,750 1=3,500 1=3,250 1=3,000 1=1,750 1=4,500 Year 0 1 2 3 4 5 6 7 8 C: Cost, I: Income, L: Salvage Value