Problem 2 You are presented with two proposals, A and B, with equal risks that require initial investments of 59,000 and $7,000. Subsequent net cash inflows are given as follows

Year	Project A	Project B
1	$3,250	$2,500
2	3,500	2,500
3	3,500	3,000
4	3,500	3,000

(a) Assuming 14% cost of capital, rank the two projects in terms of: (i) Internal rate of return, and (ii) Net present value.

(b)How do you account for the differences in ranking? Which project do you prefer? Why?

Problem 3: Compare the PI and NPV rankings of the following two projects. Which project would you prefer? Why?

Initial Investment NPV

Project X	$40,000	$8,000
Proiect Y	10,000	5,000