1. The Liberty Co. is considering two projects. Project A consists of building a wholesale book outlet on lot #169 of the Englewood Retail Center. Project B consists of building a sit-down restaurant on lot #169 of the Englewood Retail Center. The financial managers of the Liberty Co. used both NPV and IRR evaluate the two projects. They found that NPV and IRR of Project A were $70,507.61 and 20.44%, respectively. NPV and IRR of Project B were $90,182.29 and 18.84%, respectively. Which project should the Liberty Co. accept? Why?

2. Winnebagel, Inc., is looking at setting up a new plant in South Part to produce bagels and bread. The company bought some land ten years ago for $5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $5.2 million. The company wants to build its new plant on this land; the plant will cost $10.2 million to build, and the site requires $750,000 worth of grading before it is suitable for construction. The project also requires the investment in the net working capital of $500,000 at the beginning of the project. What is the proper cash flow amount to use the initial investment when evaluation this project?