Hart Corp. is considering two investment projects, P and Q. Both projects have equal lives and equal up-front expenditures. Project P has the following cash flow data. Project P Year 0 1 2. 3 Cash flows -$1,000 $425 $425 $425 What is the IRR of Project P (IRRp)? 1) 11.50% 2) 13.21% 3) 14.87% 4) 15.56% 5) 16.29% The CFO of Hart Corp. estimated the IRR of Project Q (IRR) as 12.5%. Assume that the firm is using only IRR method to make its capital budgeting decision and has no limit for capital expenditures. If the cost of capital is 11.5% and the two projects are independent, which project(s) should the firm undertake? Why? 1) Project P since IRRp > IRRO 2) Project Q since IRRp> IRRO 3) Reject both projects since both projects have IRRS > the cost of capital. 4) Accept both projects since both projects have IRRs > the cost of capital. 5) Insufficient information is given. The CFO of Hart Corp. estimated the IRR of Project Q (IRR) as 12.5%. Assume that the firm is using only IRR method to make its capital budgeting decision and has no limit for capital expenditures. If the cost of capital is 11.5% and the two projects are mutually exclusive, which project(s) should the firm undertake? Why? 1) Project P since IRR > IRRO 2) Project Q since IRRp> IRRO 3) Reject both projects since both projects have IRRs > the cost of capital. 4) Accept both projects since both projects have IRRs > the cost of capital. 5) Insufficient information is given