1. Compute the

(a) net present value,

(b) internal rate of return (IRR),

(c) modified internal rate of return (MIRR), and

(d) discounted payback period (DPB) for each of the following projects.

The firm's required rate of return is 13 percent.

Year	Project AB	Project CD	Project EF
0	$(90,000)	$(100,000)	$(96,500)
1	39,000	0	(55,000)
2	39,000	0	100,000
3	39,000	147,500	100,000

Which project(s) should be purchased if they are independent? Which project(s) should be purchased if they are mutually exclusive? Explain your answer

2. The CFO of Horatio's Hotels gave three college interns three different independent projects to evaluate. Following are the results of their analyses:

Intern's Name	Project's Life	NPV	IRR	Discounted payback	Decision
Albert	7 years	$5,300	12.0%	6.8 years	Accept
Josie	6	(1,800)	8.0	5.8	Reject
Kenny	10	4,500	10.0	9.6	Accept

The CFO agrees with the final accept/reject decision that each intern made. But she spotted an error in the numbers reported by one of the interns.

(a) Which intern's report has the error?

(b) Does the information given here provide an indication of the firm's required rate of return?

Explain your answers.