Question: 7) Here are the cash flows for two mutually exclusive projects: (10 pts) Project A B to (20,000.00) (20,000.00) t1 80,000.00 0 t2 8,000.00 o

7) Here are the cash flows for two mutually exclusive projects:

7) Here are the cash flows for two mutually exclusive projects: (10 pts) Project A B to (20,000.00) (20,000.00) t1 80,000.00 0 t2 8,000.00 o t3 8,000.00 25,000.00 a. At what interest rates would you prefer project A to B? Which project can take on a higher rate? And why? (Hint: Try drawing the NPV profile of each project using r=2% to r=10%). (4 pts) b. What is the IRR of each project? (3 pts) c. What is the benefit cost ratio of both projects? (3 pts)

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