2) Consider two mutually exclusive projects. Project A costs $250,000 and produces net cash flows of $70,000 in year 1, $80,000 in year 2, $90,000 in year 3, and $70,000 in year 4. Project B costs $400,000 and produces net cash flows of $85,000 in year 1, $90,000 in year 2, $90,000 in year 3, $120,000 in year 4 and $130,000 in year 5.

a) If the appropriate discount rate is 7%, what project would be more desirable using the NPV criteria?

b) If the appropriate discount rate is 8%, what project would be more desirable using the NPV criteria?

c) What is the crossover discount rate for project A and B?