Project A Project B

Required Return 8.25% Required Return 8.25%

Cash Flows Period Cash Flows Cash Flows Period Cash Flows

Initial Outlay -8,500 0 -8,500 Initial Outlay -9,500 0 -9,500 1 3,600 1 3,900 2 2,400 2 2,900 3 2,850 3 2,900 4 5,200 4 5,550

Discounted Payback Period 3.23 Discounted Payback Period 3.28

NPV $2,907.51 NPV $2,905.64

Profitability Index 1.3421 Profitability Index 1.3059

IRR 21.88% IRR 20.62%

MIRR 16.51% MIRR 15.72%

Crossover Rate 8.16%

NPV Profile Data NPV Profile Data

Required Return NPV A Required Return NPV B

0% $5,550.00 0% $5,750.00

5% $3,845.43 5% $3,915.80

10% $2,449.12 10% $2,411.69

15% $1,292.22 15% $1,164.15

20% $323.69 20% $118.63

25% -$494.88 25% $(765.92)

30% -$1,192.76 30% $(1,520.83)

35% -$1,792.55 35% $(2,170.28)

For Project A, anything under 21.88% is acceptable and for Project B, anything under 20.62% is acceptable. The crossover rate, where the NPVs are the same is 8.16%.

Project A Project B

Required Return 8.25% Required Return 8.25%

Cash Flows Period Cash Flows Cash Flows Period Cash Flows

Initial Outlay -8,500 0 -8,500 Initial Outlay -9,500 0 -9,500 1 3,600 1 3,900 2 2,400 2 2,900 3 2,850 3 2,900 4 5,200 4 5,550

Discounted Payback Period 3.23 Discounted Payback Period 3.28

NPV $2,907.51 NPV $2,905.64

Profitability Index 1.3421 Profitability Index 1.3059

IRR 21.88% IRR 20.62%

MIRR 16.51% MIRR 15.72%

Crossover Rate 8.16%

NPV Profile Data NPV Profile Data

Required Return NPV A Required Return NPV B

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