Management wants you to decide between two mutually exclusive projects. Their expected cash flows are given below:

Expected Net Cash Flows

Time Project ABC Project XYZ

0 -1000 -750

1 -400 275

2 -250 250

3 -150 200

4 500 200

5 500 200

6 650 200

7 650 200

8 1200 200

9 -100 0

1. Which project should be chosen if the WACC for each project is 6%? Justify your answer. 2. What if the WACC for each project was 8%? Justify your answer.

3. What is the IRR and MIRR for each project? For the MIRR, assme a WACC of 12%

4. What is the Crossover rate? 5. What is the payback period on ABC?