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Consider the following project cash flows and answer the questions below. Project Year 0 Year 1...

Consider the following project cash flows and answer the questions below.

Project Year 0 Year 1 Year 2 Year 3
A -35,000 18,000 18,000 12,000
B -25,000 20,000 40,000

a) Using Payback analysis, which project is preferred?

b) Given a cost of captial of 13%, which project is preferred?

c) If the cost of captial is 8.5%, does that change your assessment?

d) Compute IRR for each project.

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