You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B. Each project has a cost of $50,000, and the cost of capital for each is 10%. The projects expected net cash flows are as follows: Expected Net Cash Flows Year

Project A Project B

0 ($50,000) ($50,000)

1 25,000 15,000

2 20,000 15,000

3 10,000 15,000

4 5,000 15,000

5 5,000 15,000 e. How might a change in the cost of capital produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 6%? (Hint: Plot the NPV profiles.)