3 A Company identified two mutually exclusive projects A and B with the following cash flows, and with NPV profiles as shown in the sketch. NPV Profiles of Muually achive Projects Year 0 1 2 3 B A B 10400 10 000 500 4000 900 5 800 7 000 1 000 6 000 2000 2000 SE (a) Calculate the discounted payback perlod for each project and recommend the one to be accepted. (6) b) What is the internal rate of return (IRR) for each of the projects? If the required rate is 12%. which project will you choose based on the IRR criterion? (6) () If the required return is 5%. What is the NPV for each of the two projects? Which project will you choose if you apply the NPV decision criterion? Explain. (d Over what range of discount rates would you choose Project A? Project B? At what discount rate would you be indifferent between these two projects? Explain (6)