Bates & Reid, LLC, has identified the following two mutually exclusive projects:

(a) What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept? Is this decision necessarily correct?

(b) If the required return is 11 percent, what is the NPV for each of these projects? Which will you apply the NPV decision rule?

(c) Over what range of discount rates would you choose Project A? Project B? at a what discount rate would you be indifferent between these two projects? Explain.

Year Cash Flow (A)C Cash Flow (B) $40,000 24,000 20,000 16,000 12,000 $40,000 14,000 18,000 22,000 26,000