Your division at Clean & Safe Chemicals Inc. is considering two (2) investment projects: Project A and Project B. The firm’s cost of cost of capital is 10%. Both projects require an initial outlay of $30 million and their projected cash flows (in millions of dollars) would be as follows:Period 1 2 3 4Project A $5 $10 $15 $20Project B $20 $10 $8 $6Based on this information:a. Calculate each project’s net present value (NPV) * internal rate of return (IRR) * and payback period.b. If the two projects are independent which project(s) would be chosen? Explain.c. If the two projects are mutually-exclusive which project(s) would be chosen? Explain.d. If the cost of capital was 5% would this change your recommendation if the projects were mutually-exclusive? Explain.e. Calculate the “crossover rate” for Projects A and B and explain what this rate is and how it affects the choice between mutually-exclusive projects.
