Your firm is trying to determine which project it should invest in. The projects are mutually exclusive. The cost of capital is 12%.

year project A projectB

0 -34,000 -31,500

1 -27,000 14,500

2 11,500 15,000

3 20,500 16,500

4 30,500 18,000

5 35,000 19,000

6 38,000 19,500

7 40,000 20,000

a)Calculate each project's IRR and the crossover rate of the two projects.

b)Calculate each project's MIRR at a reinvestment rate of 10%.

c)Calculate each project's regular payback period.

d)Calculate each project's discounted payback period with a cost of capital of 12%.

e)Calculate each project's profitability index at a cost of capital of 12%.

f)Calculate each project's NPV.

g)Construct the NPV profiles for Project A and Project B. (Note: plot the NPVs of both projects on the same graph.) The cost of capital ranges from 0% to 30% by increments of 2%.