Use the following for Questions 1 - 4:

You are considering two mutually exclusive projects, A and B.

Project A costs $70,000 and generates cash flows of $12,000 for 10 years.

Project B costs $60,000 and generates cash flows of $2,000 for six years and then cash flows of $29,000 for four years.

Report rates in percentage form to two decimal places i.e. 10.03% not 10%

Question 1

At what discount rate would make you indifferent between choosing one project or another?

Question 2

Which project would you ACCEPT if your discount rate was 10%?

A) Project A

B) Project B

C) Both Project A and B

D) Neither Project A or B

Question 3

Which project would you ACCEPT if your discount rate was 5%?

A) Project A

B) Project B

C) Both Project A and B

D) Neither Project A or B

Question 4

What is the highest discount rate in which you can still produce a non-negative NPV?