Question: Consider the following two mutually exclusive projects: Year Proj A Proj B 0 -$350,000 -$50,000 1 45,000 24,000 2 65,000 22,000 3 65,000 19,500 4

Consider the following two mutually exclusive projects: Year Proj A Proj B 0 -$350,000 -$50,000 1 45,000 24,000 2 65,000 22,000 3 65,000 19,500 4 440,000 14,600 Whichever project you choose, if any, you require a 15% return on your investment. a. If you apply the NPV criterion, which investment will you choose?

b. If you apply the IRR criterion which investment will you choose?

c. What is the crossover rate for Projects A and B?

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