(b) Compute crossover IRR

(c) Create the NPV profile table and plot NPV profile for both projects. In the figure, indicate the crossover IRR computed from (b). Discuss under what situation NPV and IRR will give the same conclusion, and under what situation NPV and IRR will give different conclusions.

Cost of capital 9% Difference in Year 0 Project A Project B Cash Flow A-B Cumulative Cash Flow A Cumulative Cash Flow B $5,000 $5,000 $1,200 $800 $2,000 $2,000 $2,000 $4,000 $1,000 $700 $700 $500 4 NPV IRR Profitability index Payback period in years Crossover IRR Payback period No. of years before first positive cumulative cash flow+(absolute value of last negative cumulative cash flow/cash flow in the year of first positive cumulative cash flow