Use the project information below to answer parts a-e. Each project has an initial start-up cost of $10,000, and the cost of capital for each project is 12%. The projects' expected net cash flows are as follows:

a. Calculate the project's payback period, NPV, and IRR for each.
b. Which project or projects should be accepted if they are independent?
c. Which project should be accepted if they are mutually exclusive?
d. How might a change in the cost of capital produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if the cost of capital were equal to 5%?
e. Why does this conflict exist?

Project B Project A Cash Flow Year Cash Flow -10000 -10000 1. 6500 3500 3000 3500 3 3000 3500 3500 4 1000