1. Consider two mutually exclusive projects, Project 1 and 2. 20 points) Time 0 1 2 Project 1 -1000 120 120 Project 2 -1000 600 600 3 4 5 300 300 300 15000 0 6 300 -300 7 8 300 300 -600-1200 The opportunity cost of capital is 12%. (a) Calculate the NPV, IRR, simple and discounted Payback periods for project 1. (7 points) (b) Plot the NPV as a function of the discount rate for both projects. Explain which project should be chosen as a function of the discount rate. (5 points) (c) When capital is almost free, the second project seems unprofitable. Is it a calculation mistake? Provide the intuition for this result. (8 points)