Part A: You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Should you accept or reject these projects based on net present value analysis?

Year	Cash Flow Project A	Cash Flow Project B
0	-$87,000.00	-$85,000.00
1	$31,000.00	$15,000.00
2	$31,000.00	$20,000.00
3	$44,000.00	$90,000.00
Projects	R% Input	NVP's Solve
A	9.00%
B	14.00%

Required rate of return	9 percent	14 percent
Required payback period	2.5 years	2.5 years
Required accounting return	10 percent	11 percent

A. accept Project A and reject Project B

B. reject Project A and accept Project B

C. accept both Projects A and B

D. reject both Projects A and B

E. You cannot make this decision based on net present value analysis.

Part B: what is the crossover rate%? Also, which project would you pick for required rates of return less than the crossover rate?

A. 16.24%; B

B. 32.58%; A

C. 12.94%; A

D. 32.58%; B

E. You cannot make this decision based on internal rate of return analysis.