Question: Expected Net Cash Flow Year Project A Project B 0 -375 -575 1 -300 190 2 -200 190 3 -100 190 4 600 190 5

Expected Net Cash Flow Year Project A Project B 0 -375

Expected Net Cash Flow Year Project A Project B 0 -375 -575 1 -300 190 2 -200 190 3 -100 190 4 600 190 5 600 190 6 926 190 7 -200 0 1) What is each project IRR? (Based on the IRR, which project would you choose?). 2) What is the crossover rate and what is its significance? 3) At a WACC of 12% what is the regular and discounted payback period for these two projects? 1

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