Your division is considering two investment projects, each of which requires an up-front expenditure of $35 million. You estimate that the cost of capital is 10% and the the investment will produce the following after-tax- cash flows (in millions of dollars):

Year Project A Project B

1 $20 $10

2 $20 $10

3 $20 $30

4 $20 $40

a.What is the payback Period for each of the projects (assume cash flows occur evenly during the year, 1/365th each day)?

b. Computer the net present value (NPV) for each project.

c. if the two projects are independent, which projects should the firm undertake?

d. If the two projects are mutually exclusive, which project or projects the firm undertake?