Question: Question 1. Bigg company is evaluating two projects for next years capital budget. The after-tax cash flows (including depreciation) for each project are the following:

Question 1.

Bigg company is evaluating two projects for next years capital budget. The after-tax cash flows (including depreciation) for each project are the following:

Project A

Project B

Year 0

-6,000

-18,000

Year 1

2,000

5,600

Year 2

2,000

5,600

Year 3

2,000

5,600

Year 4

2,000

5,600

Year 5

2,000

5,600

Year 6

4,000

9,000

a.) If the companys WACC is 14%, find the NPV, IRR, payback, and discount payback for each project.

b.) If the projects are mutually exclusive, what is your recommendation to the company?

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