1) Empire Manufacturing is considering two mutually exclusive projects with the following cash flows. Empires cost of capital is 11 percent.

Year Project A Project B

0 (278,000) (301,000)

1 0 90,500

2 0 78,300

3 0 71,250

4 0 68,800

5 0 81,200

6 596,000 54,900

a) Compute the NPV, IRR, MIRR, and Payback Period for each project.

b) If the payback criterion was four years, which project would be chosen? Why?

c) If the hurdle rate was 13% and IRR was the decision method, which project would be chosen? Why?

d) If the hurdle rate was 13% and MIRR was the decision method, which project would be chosen? Why?

e) Which project would be chosen if NPV was the decision method? Why?