Garage, Inc., has identified the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)

0 –$ 29,400 –$ 29,400

1 14,800 4,500

2 12,700 10,000

3 9,400 15,600

4 5,300 17,200

1. What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

IRR

Project A %

Project B %

2. Using the IRR decision rule, which project should the company accept?

A) Project A

B) Project B

3. Is this decision necessarily correct?

A) Yes

B) No

4. If the required return is 12 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

NPV

Project A $

Project B $

5. Which project will the company choose if it applies the NPV decision rule?

A) Project A

B) Project B

6. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Discount rate %