Question 1: Calculate each project's Net Present Value (NPV), assuming your firm's weighted average cost of capital (WACC) is 10%.
Question 2: Calculate each project's Internal rate of Return (IRR).
Question 3: Plot NPV profiles for both projects on a graph (Note: three data points for each project are sufficient).
Question 4: Assuming that your firm's WACC is 10%:
(1) If the projects are independent which one(s) should be accepted?
(2) If the projects are mutually exclusive which one(s) should be accepted
Year Project A Project B
0 (Now) ($10,000) ($10,000)
1 6,500 3,500
2 3,000 3,500
3 3,000 3,500
4 1,000 3,500