1. You have joined the Projects division of MaraMore Inc. Your first job is to analyze two projects, which you have code-named alpha and beta. Both projects will require the same initial investment of $100,000 and are expected to generate the following cash flows over an economic life of 4 years.

Year	Project Alpha	Project Beta
1	70,000	40,000
2	32,000	40,000
3	32,000	40,000
4	9,000	40,000

Assuming that MaraMore Inc.s cost of capital for these projects is 10%:

1. Calculate the IRR for each project. Which project would you select using the IRR rule?
2. Calculate the PI for each project and indicate your decision using the rule.
3. Can you think of any situations in which, because of a change in the cost of capital, you might be confronted with conflicting decisions using the NPV and IRR rules? Show how this might happen.