SoftTalker Co. is considering two mutually exclusive projects with the following projected cash flows:

Project CF0 CF1 CF2 CF3 CF4 X -$80,000 $28,000 $28,000 $28,000 $28,000 Y -$24,000 $9,800 $9,800 $9,800 $9,800

The WACC for both projects is 10%. SoftTalker performed an analysis of these projects using both the NPV method and the IRR method, with the following results: NPVX = $8,756 IRRX = 14.96% NPVY = $7,065 IRRY = 22.98%

What decision should be made regarding these projects, and why?

a. Project X should be accepted, because it has the higher NPV.

b. Project Y should be accepted, because it has the higher IRR.

c. Neither project should be accepted, because both would result in a reduction of wealth for SoftTalkers shareholders.

d. No decision can be made, because the two methods (NPV and IRR) give conflicting results.

Now assume that the WACC is 12%.

Which of the following statements is correct?

a. There is still a conflict between the two methods: NPV indicates that Project X should be accepted, but IRR indicates that Project Y should be accepted.

b. There is still a conflict between the two methods: NPV indicates that Project Y should be accepted, but IRR indicates that Project X should be accepted.

c. There is no conflict between the methods: Both NPV and IRR indicate that Project X should be accepted.

d. There is no conflict between the methods: Both NPV and IRR indicate that Project Y should be accepted.