Project Selection Decision A firm is considering two projects, A and B, where only one can be chosen. Project A requires an initial investment of $500 and generates cash flows of $300 for the next 2 years. Project B requires an initial investment of $500 and generates cash flows of $350 and $200 in the next 2 years, respectively.

Requirements:

1. Calculate the NPV for both projects at a cost of capital of 5%, 10%, and 15%.
2. Determine which project should be selected if the cost of capital is 10%.
3. Plot the NPV profiles for both projects.
4. Identify the break-even cost of capital where the NPVs of both projects are equal.