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 1 01-3,000 1-3,000 13,000 1=2,500 1-2,500 1-2,500 1-3,000 ,0 00 2 3 L-$8,500 |Year Project B: L=$11,000 C--15,000 C24,000 1-4,250 1-4,000 1-3,750 1-3,500 1-3,250 1-3,000 1-1,750 Year 0 1 2 3 4 5 6 7 8 C: Cost, I: Income, L: Salvage Value