WF Petroleum, Inc., is trying to evaluate the following two mutually exclusive projects. Whichever project the firm chooses, it requires a 12% return on its investment.

year	cash flow (A)	cash flow (B)
0	-500,000	-500,000
1	80,000	300,000
2	100,000	220,000
3	250,000	120,000
4	380,000	60,000

(a) If you rely on the payback period method, which investment will you choose? Support your answer with relevant calculations.

(b) If you use the NPV rule, which investment will you choose? Support your answer with relevant calculations.

(c) Calculate IRRs of Projects A and B. Explain what specific problems the firm would have if the firm uses the IRR rule to choose between these two mutually exclusive investments.

(d) Over what range of discount rates would Project A have higher NPV than Project B? Explain your answers