A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows:

Project	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
M	-15,000	5,000	5,000	5,000	5,000	5,000
N	-45,000	14,000	14,000	14,000	14,000	14,000

a. Calculate NPV for both projects

b. Calculate IRR for both projects

c. Calculate MIRR for both projects

d. Calculate payback for both projects

e. Calculate discounted payback for both projects

f. Assuming the projects are independent, which one(s) would you recommend?

Only project M because NPV(m)>NPV(n)

Only project N because NPV(n)>NPV(m)

both projects would be accepted because both NPV's are positive

only project M because IRR(m)>IRR(n)

both projects would be rejected because both NPVs are negative

g. If the projects are mutually exclusive, which would you recommend?

The project with the highest NPV is chosen. Accept Project N

The project with the highest IRR is chosen. Accept Project M

The project with the highest MIRR is chosen. Accept Project M

The project with the shortest payback period is chosen. Accept Project M

The project with the highest positive IRR is chosen. Accept Project N

H. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

The conflict between NPV and IRR is due to the fact that cash flows are in the form of annuity

The conflict between NPV and IRR is due to the different in timing of the cash flows

There is no conflict between NPV and IRR

The conflict between NPV and IRR is due to the different in size of the projects.

The conflict between NPV and IRR is due to the relatively high discount rate.