1)A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

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Project S	-$1,000	$890.52	$240	$15	$15
Project L	-$1,000	$5	$240	$420	$749.33

The company's WACC is 9.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

2)A firm with a WACC of 10% is considering the following mutually exclusive projects:

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2

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4

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Project 1	-$250	$70	$70	$70	$175	$175
Project 2	-$450	$250	$250	$145	$145	$145

Which project would you recommend?

Select the correct answer.

a. Project 1, since the NPV1 > NPV2.

b. Project 2, since the NPV2 > NPV1.

c. Both Projects 1 and 2, since both projects have NPV's > 0.

d. Both Projects 1 and 2, since both projects have IRR's > 0.

e. Neither Project 1 nor 2, since each project's NPV < 0.