PLEASE DONT USE EXCEL !!!!!

5) Hardchoice Corp. is a firm considering prospective capital budgeting projects. Selected data on the projects follow: Year 1 100 Year 2 110 Year 3 120 Year 4 130 Year 5 140 Project A B-A D Year 0 -400 + -200 -400 - 100 140 100 130 100 120 100 110 100 100 a) Consider only projects A and B by examining the incremental project cash flows B-A. They are mutually exclusive opportunities. If the IRRB-A = 12% and the discount rate is 15% then what is your decision? (2 marks) b) Ignoring the information in question (a), assume instead that projects A and C are independent, Hardchoice is subject to capital rationing (i.e., it may not be able to afford both projects), and the relevant discount rate is 10%. i) What is the IRR of Project A? Project C? (2 marks) ii) How would you rank Project A compared to Project C? (1 mark) c) Consider the following statements and circle the Roman numeral corresponding to the one that is true. (2 marks) I The NPV of project D will be much more sensitive to changes in the discount rate than will the NPV of project A. II If projects C and D are mutually exclusive, incremental analysis indicates that one should reject project C and accept project D. III It is possible for projects A and D to have the same NPV. IV All of the above are true. V None of the above is true. 5) Hardchoice Corp. is a firm considering prospective capital budgeting projects. Selected data on the projects follow: Year 1 100 Year 2 110 Year 3 120 Year 4 130 Year 5 140 Project A B-A D Year 0 -400 + -200 -400 - 100 140 100 130 100 120 100 110 100 100 a) Consider only projects A and B by examining the incremental project cash flows B-A. They are mutually exclusive opportunities. If the IRRB-A = 12% and the discount rate is 15% then what is your decision? (2 marks) b) Ignoring the information in question (a), assume instead that projects A and C are independent, Hardchoice is subject to capital rationing (i.e., it may not be able to afford both projects), and the relevant discount rate is 10%. i) What is the IRR of Project A? Project C? (2 marks) ii) How would you rank Project A compared to Project C? (1 mark) c) Consider the following statements and circle the Roman numeral corresponding to the one that is true. (2 marks) I The NPV of project D will be much more sensitive to changes in the discount rate than will the NPV of project A. II If projects C and D are mutually exclusive, incremental analysis indicates that one should reject project C and accept project D. III It is possible for projects A and D to have the same NPV. IV All of the above are true. V None of the above is true