A. Project S requires an initial outlay at t = 0 of $10,000, and its expected cash flows would be $4,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $47,000, and its expected cash flows would be $11,350 per year for 5 years. If both projects have a WACC of 15%, which project would you recommend?

Select the correct answer below.

a. Project L, because the NPVL > NPVS.

b. Project S, because the NPVS > NPVL.

c. Both Projects S and L, because both projects have IRR's > 0.

d. Neither Project S nor L, because each project's NPV < 0.

e. Both Projects S and L, because both projects have NPV's > 0.

B. A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

0

1

2

3

4

Project S	-$1,000	$894.34	$240	$10	$15
Project L	-$1,000	$5	$260	$380	$775.84

The company's WACC is 9.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places._____ %