Consider the following cash flows for two mutually exclusive projects (A and B).

a. Calculate NPV for both projects using discount rates of 12% and 17%.

b. What is the IRR of each project?

c. Which project would you choose to do if your discount rate was 12%? 17%? Explain how you made your decision.

Year A B

0 -31,000 -27,500

1 21,000 19,000

2 12,500 12,250

3 6,000 5,000

4 1,500 0