Question: Question 3 Consider the following two mutually exclusive projects. The required rate of return is 10%. Part A: Calculate the NPV for each project. Year

Question 3

Consider the following two mutually exclusive projects. The required rate of return is 10%.

Part A: Calculate the NPV for each project.

Year	Project A	Project B
0	-$100,000	-$100,000
1	30,000	80,000
2	40,000	20,000
3	60,000	20,000

Part B: Calculate the IRR for each project.

Part C: Calculate the payback period for each project.

Part D: Suppose you were the manager deciding between these two projects. Would you prefer to use the payback period decision rule or the NPV decision rule? Why use your solutions to parts A and C to support your answer?

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