1. ABC has been considering two mutually exclusive projects with the following NPVs and project lives.

Project	NPV	Economic Life
A	5,000	3 years
B	6,500	5 years

ABCs cost of capital is 15%. Assuming that projects can be repeated with the same cash flow and risk profiles what would be the respective Net Terminal Values of projects A and B (round to the next integer)? What should be the decision?

14,599 and 12,927, Accept A

2,190 and 1,939, Accept A

Accept both A and B

33,333 and 43,333, Accept B

2.ABC company is considering a new project. The cash flow data and WACC is given below. What is the company's discounted payback period.

WACC:	10%
YEAR	0	1	2	3	4
Cash Flows:	-$1,000	$525	$485	$445	$405

1.98 years

1.92 years

1.72 years

2.36 years