The following several questions refer to the diagram.

a) The IRR for project A is _(_____ )_; The IRR for project B is __( )_______.

b) Assume that the firm can only do one of the two projects. If the RRR for the firm is 5%, which project should the firm do?

c) If the firm's RRR(Required Rate of Return) is less than ( ______), the (________ ) rule gives the wrong ranking.

d) Which project should you pick if you are uncertain of the correct RRR?

e). Suppose the cash flows from Project B are suddenly found to be lower, what would the IRR of Project B have to fall to in order to guarantee that you would always choose Project A?

Project A NPV Project B discount rate (%) 0 5 8 10 12