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Exercise 1 CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects...

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Exercise 1 CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 + + + Project M -$30,000 $10,000 $10,000 $10,000 $10,000 $10,000 Project N - $90,000 $28,000 $28,000 $28,000 $28,000 $28,000 1. Calculate the NPV and IRR of both projects 2. What project would you choose if they were independent? 3. What project would you choose if they were mutually exclusive

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