Fredericton Allied Networks (FAN) is reviewing three projects. FAN has adjusted the cost of capital to reflect the risk level of each project. The cash flows, which occur at year end, are as follows:

Required:
(a) Calculate the net present value for each project.
(b) Which project should FAN choose if it can only do one project?
(c) Without doing any further calculations, determine the internal rate of return for Project 1.

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Project Cash Flows (thousands of dollars) Cost of Capital Year 8% 5% Project 2 S (160) 3% Project 3 $ (310) Project 1 (200) 20 40 60 50 30 20 42 30 20 67 35 15