You are considering investment in the following projects. Assume that your discount rate is 12% per year for both projects. Project As cash flows Year 0 Year 1 Year 2 Year 3 Year 4 -$12,000 $7,000 $3,000 $2,000 $1,500 Project Bs cash flows Year 0 Year 1 Year 2 Year 3 Year 4 -$11,000 $6,000 $2,500 $1,500 $1,200

(a) Calculate IRR for project A and IRR for project B.

(b) Calculate NPV for project A and NPV for project B.

(c) If projects A and B are mutually exclusive which project will you accept, if any?

(d) Now suppose that your discount rate is 5% per year for both projects. If projects A and B are mutually exclusive which project, will you accept, if any?

(e) Calculate Payback Period for project A and Payback Period for project B.