You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value

Year	Project(A)	Project (B)
0	-$30,000	-$25,000
1	10,000	8,000
2	11,000	8,000
3	12,000	8,000
4	13,000	8,000

The required rate of return is 10%.

(a) What is the NPV for each of the projects? Which project should be accepted if NPV method is applied? Explain why.

(b) What is the IRR for each of the projects? Which project should be accepted if IRR method is applied? Explain why.

(c) What is the payback period for each of the projects? Which project should be accepted if payback period method is applied? Explain why.

(d) What is the discounted payback period for each of the projects? Which project should be accepted if discounted payback period method is applied? Explain why.

(e) What is the profitability index for each of the projects? Which project should be accepted if profitability index method is applied? Explain why.

(f) Find the crossover rate. Show the equation.

(g) Sketch the NPV profile. You must plot at least 5 points for the profile: two points on the x and y axis each, and the cross-over rate on the x axis.