The future cash flows of two mutually exclusive capital projects follow:

Project A: Uneven Flow

Year0123

Cash Flow(-$12,000)$6,500$10,500$6,000

Project B: Annuity Flow

Year0123456**Annuity**

Cash Flow(-$30,000)$8,500$8,500$8,500$8,500$8,500$8,500

Calculate the following for each project. The discount rate (required return) is 8%.

(a) What are the Net Present Values (NPVs) for Project A and Project B?

Project A:Project B:

(b) What are the Internal Rates of Returns (IRR's) for Project A and Project B?

Project A:Project B:

(c) What are the Equivalent Annual Annuities (EAA's) for Project A and Project B?

Project A:Project B:

(d) What are the Profitability Indexes (PI's) for Project A and Project B?

Project A:Project B:

(e) What are the payback periods for Project A and Project B?

Project A:Project B:

(f) Which project would you pick given that they are mutually exclusive projects? Why?