Suppose you are going to choose between the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)

0. -$78,500 -$78,500

1. 43,000 21,000

2. 29,000 28,000

3. 23,000 34,000

4. 21,000 41,000

Questions:

(1) Which project should you accept based on NPV rule if the cost of capital for the two projects is 10%?

(2) Which project should you accept based on IRR rule?

(3) Which project should you accept based on MIRR rule if the reinvestment rate of return is 10%?

(4) What may have caused the NPV and IRR rankings conflict? IF YOU COULD EXPLAIN QUESTIONS 3 & 4 IN DEPTH I WOULD REALLY APPRECIATE IT. THANK YOU.