The discount rate of the two mutually exclusive projects is 7 percent.

	Project A	Project B
Year	CF	CF
0	(100,000)	(200,000)
1	25,000	(40,000)
2	40,000	90,000
3	55,000	200,000
NPV w/ 7% discount		4,486
Internal Rate of Return (IRR)		7.80%
Profitability Index (PI)	1.0320

a. Calculate NPV and IRR of Project A.

b. Calculate PI of Project B.

c. Assuming discount rate does not vary, explain the circumstances in which a firm should select Project A and circumstances in which it should select Project B. (Conditions in which a firm gives greater weight to Net Present value over IRR or PI and vice versa)

**Please explain how you solve it rather than just giving answers.