Question 4 (25 points)

Consider the following information for project A and B. Assume the cost of capital is 13%.

Year	A	B
0	-10,000	-10,000
1	6500	3500
2	3000	3500
3	3000	3500
4	1000	3500

1. Calculate for each project the payback period, NPV and the IRR.
2. Would you accept the projects? Assume the projects are independent and the upper bound is 3 years.
3. Draw a graph that presents the relationship between the opportunity cost of capital and the NPV in project B. Explain your findings.

Solve parts a (only NPV & IRR) & c with excel too.