1. Thomas Company is investing $10,000 in a project that has a two-year life with an internal rate of return (IRR) of 10%. The project yields a net cash flow of $7,260 for Year 2.

The present value of $1 for one year at 10 percent is 0.90909

The present value of $1 for two years at 10 percent is 0.86245

What is the net cash flow produced by the project for Year 1? Round any calculations to the nearest dollar.

a. $2,740

b. $4,400

c. $4,000

d. $6,000

2. Assume that an investment of $100,000 produces a net cash flow of $60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is

a. $0

b. $6,800

c. $1,400

d. ($4,000)