5 . UHM Corp. is considering two mutually exclusive projects. Assume the cost of capital is 12%. The cash flows that the projects are expected to generate are as follows: Year 0 1 2 3 4 Project A $(600,000) 300,000 100,000 200,000 200,000 Project B $(600,000) 250,000 300,000 100,000 125,000 UHM uses the net present value method to analyze the project. UHM Corporation should: A B C. Undertake both Project A and B. Undertake Project A, but not Project B. Undertake Project B, but not Project A. h 6. A company's operations analyst is evaluating a plant expansion project that is likely to be financed in part by Issuing a new common equity. Flotation costs are expected to be 4% of the amount of new equity capital raised The most appropriate way for the analyst to treat the flotation costs is to: A B. ignore them, because flotation costs for common equity are likely to be nonmaterial. estimate the cost of equity capital based on a share price 4% less than the current price. determine the flotation cost attributable to this project and treat it as part of the project's initial cash outflow 7. Which of the following statements is correct? There can never be a conflict between NPV and IRR decisions if the decision is related to choosing between mutually exclusive projects with normal cash flow patterns, i.e., higher NPV value projects always have higher IRRs. A change in the cost of capital would normally change both a projects' NPV and its IRR. II. A B. C. D. Iis correct Il is correct. Both I and I are correct. Neither I nor il are correct