Your firm is considering two projects that are mutually exclusive. Each project will require an initial outlay of $500,000. The forecast yearly cash flows are shown below.

Time	Project A	Project B
0	-500,000	-500,000
1	250,000	80,000
2	180,000	125,000
3	120,000	200,000
4	100,000	300,000

a) Calculate the IRR of each project.

b) Calculate the NPV of each project at discount rates of 0%, 8%, and 16%.

c) Calculate the incremental IRR (i.e., the cross-over rate).

d) Construct an NPV profile graph to illustrate how the choice between the projects depends on the discount rate. Make sure that you are explicit about the conclusions to be drawn from the NPV profile (Do X if ; do Y if ; do Z if)