Question: A firm with a 14% WACC is evaluating two projects for this years capital budget. After-tax cash flows, including depreciation, are as follows: Year 0

A firm with a 14% WACC is evaluating two projects for this years capital budget. After-tax cash flows, including depreciation, are as follows:

Year 0 1 2 3 4 5
Project A -$6000 $2000 $2000 $2000 $2000 $2000
Project B -$18000 $5600 $5600 $5600 $5600 $5600

a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project.

b. Assuming the projects are independent, which one or ones would you recommend?

c. Assuming the projects are mutually exclusive, which would you recommend?

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