P9-16 All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is $150,000. The company's board of directors has set a maximum 4-year paybas considering two mutually exclusive projects, each with an initial investment of requirement and has set its cost of capital at 9%. The cash inflows associated with the two projects are as follows: Cash inflows (CF) Project A Project B Year 1 2 3 4 2 3 $45,000 45,000 45,000 45,000 45,000 45,000 $75,000 60,000 30,000 30,000 30,000 30,000 5 6 a. Ul Law ojcu al 07. c. Calculate the NPV of each project at 9%. d. Derive the IRR of each project. e. Rank the projects by each of the techniques used. Make and justify a recommendation. 1. NPV at 9% 2 solution 3 YEAR 4 0 5 1 PV OF CF PV OF CF 6 2 7 3 4 CF PVIF 9% (150,000) 45,000 45,000 45,000 45,000 45,000 45,000 NPV CF PVIF 9% (150,000) 75,000 60,000 30,000 30,000 30,000 30,000 NPV 5 6 0 1 2 answer rank d. IRR answer rank solution PV OF CF CF PVIF 19% 0 (150,000) 1 45,000 2 45,000 3 45,000 4 45,000 5 45,000 6 45,000 NPV CF PVIF 22% PV OF CF (150,000) 75,000 60,000 30,000 30,000 30,000 30,000 NPV CF PVIF 20% PV OF CF 0 (150,000) 1 45,000 2 45,000 3 45,000 4 45,000 5 45,000 6 45,000 NPV CF PVIF 23% PV OF CF (150,000) 75,000 60,000 30,000 30,000 30,000 30,000 NPV