Question: 1. (15 points, calculation) Consider the following two mutually exclusive projects: Year 0 Year 1 Year 2 Project A -1,000 1,000 500 Project B -500

1. (15 points, calculation) Consider the following two mutually exclusive projects: Year 0 Year 1 Year 2 Project A -1,000 1,000 500 Project B -500 500 400 The appropriate discount rate for the projects is 10%. (a) Calculate PI for each project. (b) Calculate NPV for each project. (c) Which project should be chosen? Why? 2. (5 points, calculation) A project has an initial cost of $384,200 and cash inflows of $187,636. $93,496, $103,802, and $92,556, for Years 1 to 4, respectively. What is the NPV of this project if the discount rate is zero

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