Consider the following two MUTUALLY EXCLUSIVE PROJECTS:

Year Cash Flow (Project R) Cash Flow (Project S)

0 -$43,000 -$43,000

1 23,000 7,000

2 17,900 13,800

3 12,400 24,000

4 9,400 26,000

**SHOW ALL WORK FOR THE FOLLOWING QUESTIONS**

1.) Rank the projects by IRR. Using IRR, which project should be accepted?

2.) If the required return is 11% (hurdle rate/cost of capital), rank the projects by NPV?

3.) The NPV of Project R is:

4.) At what rate of return are we indifferent to the projects (this is the crossover rate)?