Use the following information for problems 1 to 5. Assume that the projects are mutually exclusive. YearCash Flow (A)Cash Flow (B)0($525,600)($425,600)1$323,100$235,9002$180,200$163,9003$145,000$135,0004$88,220$79,000 What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct?If the required return is 13 percent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule?Over what range of discount rates would the company choose Project A? Project B? At what discount rate would the company be indifferent between these two projects? Explain.Compute the payback period for each project.Compute the profitability index for each project.

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider two mutually exclusive projects, A and B, whose costs and cash flows are shown in the following table: Year Project A Project B 1 $(15,000) $(22,840) 2 9,000 8,000 3 8,000 8,000 4 2,500 8,000 5 3,000 8,000 Calculate the cross over rate. Please use equations not just excel
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Year	Cash Flow (A)	Cash Flow (B)
0	($525,600)	($425,600)
1	$323,100	$235,900
2	$180,200	$163,900
3	$145,000	$135,000
4	$88,220	$79,000