West Coast Chemical Company is considering two mutually exclusive investments. The firm currently faces a cost of capital of 12.5%. The projects expected net cash flows are as follows:

Year Project A Project B

0 -47,800 -65,200

1 21,600 21,050

2 45,000 21,050

3 42,000 21,050

4 41,500 21,050

5 -30,000 21,050

a. Determine the NPV for both Projects A and B. Which project should be chosen? Explain.

b. Determine the IRR and MIRR for both Projects A and B. Which project should be chosen? Explain.

c. At what cost of capital would the NPV profiles of the two projects cross each other? What is the significance of this crossover rate in a managers ranking of the projects? Explain