Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 8% and that the investments will produce the following after-tax cash flows (in millions of dollars): Year

Project A Project B

1 5 20

2 10 10

3 15 8

4 20 6

What is the regular payback period for each of the projects? Round your answers to two decimal places. Project A: 2.67 years Project B: 1.5 years

What is the discounted payback period for each of the projects? Do not round intermediate calculations. Round your answers to two decimal places. Project A: years Project B: years Calculate the NPV of the two projects. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $

Calculate the IRR of the two projects. Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: %

If the two projects are independent and the cost of capital is 8%, which project or projects should the firm undertake? The firm should undertake -Select- .

If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? The firm should undertake -Select- . If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? The firm should undertake -Select- .

What is the crossover rate? Round your answer to two decimal places. %

If the cost of capital is 8%, what is the modified IRR (MIRR) of each project? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: %