For mutually exclusive projects, explain why picking one project over another because it has a larger IRR can lead to mistakes.

QUESTION 2 ABC Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars: Items Year 1 Revenues 112 Costs of Good soles and operating expenses 47.7 Depreciation 25.9 Increase in net working capital 3. 1 7 Capital expenditures 29.1 Marginal corporate tax rate 30% Unlevered Net Income 19.7 Year 2 160 59.9 35.5 ,6 43.8 30% 38.9 a. What are the free cash flows for this project for the first years and the second year? b. If ABC has a debt of 5 thousand dollars and its number of shares outstanding is 2 thousand shares, what is the price of its stock