Please assist with the following problem. Provide your solutions in Excel.
Mutual exclusive investment
Here are the cash flow forecast for two mutually exclusive projects:
Cash Flows, Dollars
Year Project A Project B
0 -$100 -$100
1 30 49
2 50 49
3 70 49
1) Which project would you choose if the opportunity cost of capital is 2 percent?
2) Which would you choose if the opportunity cost of capital is 12 percent?
3) Why does you answer change?