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Question 1 Note: No template is provided for this question. Set up your own calculations on the Q1 worksheet to answer each part of the question. Make sure your work is clean and clear (e.g., use input cells for parameters of interest, clearly label any tables or calculations, etc.). Points may be taken off for work that is messy, unclear, or unlabeled. IMPORTANT: Use cell references to your Q1 worksheet in order to fill in your final answers below. Your manager has asked you to evaluate two projects (cash flows shown below). The first cash flow is the initial investment and occurs today. The subsequent cash flows occur on an annual basis starting 1 year from today. Assume the appropriate discount rate is 8.00%. Project A Project B Year 0 1 2 3 4 (7,000) 2.800 3,500 2.380 350 420 (7,500) 2,700 2,625 2,400 1,500 1,500 a) What is the net present value and internal rate of return for each project? NPV of Project A ($) NPV of Project B ($) IRR of Project A (%) IRR of Project B (%) b) Which project is preferred based on NPV? Which project is preferred based on IRR? Best project based on NPV? Best project based on IRR? c) Calculate the NPV of each project across various discount rates from 0% to 20%. What is the crossover rate? Crossover rate (%) d) Suppose that future cash flows can be reinvested at 6.00%. What is the modified IRR of each Project? MIRR of Project A (%) MIRR of Project B (%) B C D E F G H J K L M 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

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