Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%.

	0		1		2		3		4
Project A	-900		500		320		380		310
Project B	-900		430		315		395		400

a. What is Project Delta's IRR? Do not round intermediate calculations. Round your answer to two decimal places.

b. What is the significance of this IRR?

It is the _______ _______ (Select: equity return, crossover rate, interest yield) after this point when mutually exclusive projects are considered there is no conflict in project acceptance between the NPV and IRR approaches.

c. Review the graphs below. Select the graph that correctly represents the correct NPV profile for Projects A and B by using the following drop down menu.

NPV Profiles A NPV Profiles B INPV ($ INPV (5) 600 600 5001 400- 300 500+ 400+ 300 2001 2001 100 100 5 10 15 20 25 30 5 10 15 20 30 -100 -1001 Cost of Capital (%) -200 Cost of Capital -2001 -3001 -4001 -3001 -4001 NPV Profiles C NPV Profiles D INPV (5) INPV (5) 600 600 500 | 500+ 400 + 400 300 300 200- 2007 100+ 100 5 10 15 20 25 30 5 10 15 20 25 30 -100 -1001 Cost of Capital (%) -2007 Cost of Capital -200 -3001 -400+ -300 -4001 NPV Profiles A NPV Profiles B INPV ($ INPV (5) 600 600 5001 400- 300 500+ 400+ 300 2001 2001 100 100 5 10 15 20 25 30 5 10 15 20 30 -100 -1001 Cost of Capital (%) -200 Cost of Capital -2001 -3001 -4001 -3001 -4001 NPV Profiles C NPV Profiles D INPV (5) INPV (5) 600 600 500 | 500+ 400 + 400 300 300 200- 2007 100+ 100 5 10 15 20 25 30 5 10 15 20 25 30 -100 -1001 Cost of Capital (%) -2007 Cost of Capital -200 -3001 -400+ -300 -4001