Question: a. Your division is considering two investment projects, each of which requires an upfront expenditure of $25 million. You estimate that the cost of capital

a. Your division is considering two investment projects, each of which requires an upfront expenditure of $25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars):

b. What is the discounted payback period for each of the projects?c. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake?d. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake?e. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake?f. What is the crossover rate?g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?

Project B Project A Year 20 1 2 10 15 20 10 8 3 . 4 2

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