Question: Projects A and B are mutually exclusive. Project A has an initial cost of $72,000 and provides cash inflows of $22,000, $35,000, $42,500 and $12,000.

Projects A and B are mutually exclusive. Project A has an initial cost of $72,000 and provides cash inflows of $22,000, $35,000, $42,500 and $12,000. Project B has an initial cost of $25,000 and provides cash inflows of $10,000. $12,000, $22,000, and $5,000 for Years 1 through 4, respectively. The required rate of return for both projects is 11 percent.

a. What is the NPV for Project A and Project B?

b. What is the IRR for Project A and Project B?

c. Which project(s) should be accepted?

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