Question: C E G H M N 0 P Q R As a project manager with Falcon Plastics, you are considering two mutually exclusive projects.

C E G H M N 0 P Q R As a

C E G H M N 0 P Q R As a project manager with Falcon Plastics, you are considering two mutually exclusive projects. Below are the project's cash flows and NPV profile tables. The NPV profile highlights the anticipated NPV for each project depending on the discount rate Falcon Plastics adopts as its weighted average cost of capital. 1 2 3 Cash Flows NPV Profiles 4 Years Project A 5 6 7 B 9 012345 -$370,000 Project B -$370,000 Discount Rates NPV - Project A NPV - Project B 0% $115,000 $130,000 $110,000 $75,000 2% $88,507 $98,546 $100,000 $75,000 4% $64,249 $69,948 $100,000 $100,000 6% $41,989 $43,885 $100,000 $125,000 8% $21,516 $20,280 10 $75,000 $125,000 10% $2,647 -$1,711 11 12% -$14,779 -$21,700 12 14% -$30,904 -$40,072 Addressing the following questions. 15 17 19 A: Based on the NPV profiles, should both projects be pursued? Offer a coherent explanation. B: For the low discount rates, which choice creates more value for the firm? Offer an explanation. 20 C: Based on the above tables, which investment choice has a higher IRR? Explain your choice. D: Based on the NPV profiles, which investment choice is more sensitive to the discount rates? Please, explain.

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