A firm with a 14% WACC is evaluating two projects for this year’s capital budget. Project A has a cost of $6000 and its expected cash inflows are $2000 for 5 years. Project B has a cost of $18000 and its expected cash inflows are $5600 for 5 years.

a.Calculate NPV, IRR, payback, and discounted payback for each project.
b.Assuming the projects are independent which one(s) would you recommend? Why?
c.If the projects are mutually exclusive, which would you recommend? Why?
d.Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?