Time disparity ranking problem

10-11B. (Time disparity ranking problem) The Z. Bello

10-11B. (Time disparity ranking problem) The Z. Bello Corporation is considering two mutually exclusive projects. The cash flows associated with those projects are as follows:

YEAR PROJECT A PROJECT B
0 -$50,000 -$50,000
1 16,000 0
2 16,000 0
3 16,000 0
4 16,000 0
5 16,000 $100,000

The required rate of return on these projects is 11 percent.
a. What is each project’s payback period?
b. What is each project’s net present value?
c. What is each project’s internal rate of return?
d. What has caused the ranking conflict?
e. Which project should be accepted? Why