Use the following for Questions 1 - 5: 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 seven years and then generates a cash flow of $115,000 in year 8. Report rates in percentage form to two decimal places i.e. 10.03% not 10%

Question 1 (3 points) Calculate what discount rate would make you indifferent between choosing one project or another. i.e. what discount rate produces the same NPV for both projects? Question 2 (1 point) Which project would you ACCEPT if your discount rate was 1%?

A) Project A B) Project B C) Both Project A and B D) Neither Project A or B

Question 3 (1 point) 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 (1 point) 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 5 (2 points) What is the highest discount rate in which you can still produce a non-negative NPV for at least one project? (Give the %)