Economics Cash Flow and IRR Problem

Need help with this. Please show work.

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 You have a choice between the following two mutually exclusive projects.  Assume cash is received at the end of the year.

Net Cash Flow

Year

Project ‘A’

Project ‘B’

0

 $(40,000.00)

 $(40,000.00)

1

 $  30,000.00

 $  – 

2

 $  20,000.00

 $  – 

3

 $  10,000.00

 $  – 

4

 $  – 

 $  50,000.00

5

 $  – 

 $  40,000.00

a.  (5 points) Plot the present value profile for both projects on the same graph. (Use a range between 0-100%)

b.  (5 points) Which project would you recommend if your investment opportunity interest rate is 10%? What is the NPV for each project at this rate?

c.  (5 points) Which project would you recommend if your investment opportunity interest rate is 20% what is the NPV for each project at this rate?

d.  (5 points) What is the IRR for each project?

 
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