Question: 1.XYZ Corp. is evaluating two projects. Project A has $50 thousand in up-front costs, and has after-tax cash flows of $10 thousand, $20 thousand, and

1.XYZ Corp. is evaluating two projects. Project A has $50 thousand in up-front costs, and has after-tax cash flows of $10 thousand, $20 thousand, and $30 thousand during the first three years. Project B has $80 thousand in up-front costs, and has after-tax cash flows of $15 thousand, $30 thousand, and $50 thousand. The companys WACC is 6%.

a.What is the IRR for project A?

b.What is the IRR for project B?

2.How are taxes and depreciation handled differently when calculating operating cash flows?

c.If the projects are independent, should the company do either (or both) of them?

d.If the projects are mutually exclusive, which (if either) should it do?

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