Time 0 1 2 3 4

Cash Flow -5,000 3,000 2,000 1,000 3,000

5. Compute the equivalent annual annuity with a 10 percent discount rate, and then tell me what the decision rule is if you comparing these cash flows to another project. 6. Label the axis with numbers for the 2 mutually exclusive projects (below), and then write a brief explanation of which project you would choose based on IRR and which you would choose based on NPV. NPV project B A -10,000 10,000 1,000 1,000 Cash Flows B -10,000 1,000 1,000 12,000 Project A Crossover rate Discount rate