Acme Mfg is considering two projects, A & B, with cash flows as shown below:

Year

CFA

CFB

0

($ 50,000)

($ 100,000)

1

$ 20,000

$ 60,000

2

$ 20,000

$ 25,000

3

$ 20,000

$ 25,000

4

$ 20,000

$ 25,000

The opportunity cost of capital for A is 14 percent. The opportunity cost of capital for B is 10 percent.

1. Calculate the NPV for each project.
2. Calculate the IRR for each project.
3. Which project(s) should be accepted? Why?