You are a divisional manager. Your employees come to you with two potential projects. Project

A and

$$

a$.$ b$.$ c$.$ d$.$ e$.$ f$.$ g$.$ h$.$ i$.$ j$.$ k$.$ l$.$ m$.$ n$.$

o$.$

Project B have equal risk. Their expected cash flows starting today through year $4$ are: Project A: $-50,1\mathrm{.}5,20,40,1\mathrm{.}4$

Project B: $-450,140,100,200,90$

If WACC $=5\%,$ what is Project A$$s NPV and do you recommend accept or reject? If WACC $=5\%,$ what is Project B$$s NPV and do you recommend accept or reject? If WACC $=8\%,$ what is Project A$$s NPV and do you recommend accept or reject? If WACC $=8\%,$ what is Project B$$s NPV and do you recommend accept or reject? If WACC $=10\%,$ what is Project A$$s NPV and do you recommend accept or reject? If WACC $=10\%,$ what is Project B$$s NPV and do you recommend accept or reject? What is firm A$$s IRR?

What is firm B$$s IRR?

What is project A$$s payback period?

What is project B$$s payback period?

Assuming WACC $=5\%,$ what is project A$$s discounted payback period?

Assuming WACC $=5\%,$ what is project B$$s discounted payback period? Whatisthecrossoverrate?

Draw $($sketch$)$ both project$$s NPV profile on one graph, clearly labeling any axis intercepts.

$($Self study$).$ If WACC is not provided, what should be your criteria for project selection?