Question: Problems Problem 1 (10 points) The following table gives the projection of cash flows for two projects. Assume that the risk premium of both projects

Problems Problem 1 (10 points) The following table gives the projection of cash flows for two projects. Assume that the risk premium of both projects is 7%. The risk free rate is 5%. Use the information to answer the following questions. Project Cash Flows Today Cash Flows in One Year 60 60 150 o) Which project should be selected and why? (2) Assume that the investor has access to borrowing and the investor prefers to create a strategy that combines project B and borrowing. How much should the investor borrow so that this strategy will provide the same cash flow TODAY as project A? How much does the investor need to pay the bank back in one year? What is the NPV of this strategy

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