Suppose you are analyzing two proposed projects that have Br. 1,062,500 (Project A) and Br. 637,500 (Project B) initial investments with the following expected cash flows:

Year Project A Project B

1 Br. 340,000 Br. 212,500

2 425,000 212,500

3 637,500 425,000

Required:

(a) Calculate the net present values (NPVs) for each project, assuming the firm's WACC is 10% (show with steps).

(b) Calculate the Profitability Index for each project (show with steps).

(c) Which project(s) should be adopted if the projects are independent each other? (Show with steps).

(d) Which project should be adopted if the projects are mutually exclusive ones? (Show with steps).