Finance

(1). Evaluate the following mutually exclusive projects using IRR as a selection criterion. Assuming the discount rate to be 14%, which

project—if either—would be selected? Project A costs $50,000 and returns $15,000 after-tax annually. Project B costs $35,000 and

returns $11,000 after-tax annually. Both projects last 5 years.

(2). A new machine will cost $100,000 and generate after-tax cash inflows of $35,000 for 4 years. Find the NPV if the firm uses a 12%

opportunity cost of capital. What is the IRR? What is the payback period?

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