Exercise 8: Deciding between two options Luster Electronics Company is analyzing two capital projects, project A and project B. Each an initial capital cost of $12,000, and the weighted average cost o st of capital for both projects is 12%. The projected annual cash flows are as follows: Year Project A Project B ($12,000) ($12,000) 5,000 7,000 3,500 4,000 3,000 QUIAWN- O 3,500 2,500 3,000 2,000 2,300 1,500 2,000 Questions Ex8. 1 For each project, calculate the following: . Payback period . Net present value At 12%, Project A's NPV is $ At 12%, Project B's NPV is $ . Internal rate of return Project A's IRR is % Project B's IRR is % . Profitability index (using the 12% discount rate) Ex8.2 Which project or projects should be accepted if the two are independent ? Ex8.3 Which project should be accepted if the two are mutually exclusive (that is, you can choose only one