Question: Solli is considering two projects, A & B. Cash flows are shown below. The opportunity cost of capital for A is 14.0% and for B

Solli is considering two projects, A & B. Cash flows are shown below. The opportunity cost of capital for A is 14.0% and for B is 10.0%.

Period

CF (A)

CF (B)

0

-$50,000

-$100,000

1

$20,000

$60,000

2

$20,000

$25,000

3

$20,000

$25,000

4

$20,000

$25,000

a. Calculate the NPV for each project. A and B

b. Calculate IRR for project A and B

c. Which project should be selected?

d. Rationale behind selection

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