5.
You have two mutually exclusive projects. The cost of capital is 11 percent. The cashflows are given below.


Year
Project A


Year
Project B
Investment
Cashflow
0
$2,000,000

Investment
Cashflow
0
$1,000,000
1
$300,000

1
$100,000

2
$200,000


2
$100,000

3
$200,000


3
$100,000

4
$600,000


4
$400,000