Question: 1. Consider the following cash flows (C/F) for two projects, Alpha and Beta: Year 0 Year 1 Year 2 C/F Year 3 Year 4 Year

1. Consider the following cash flows (C/F) for two projects, Alpha and Beta: Year 0 Year 1 Year 2 C/F Year 3 Year 4 Year 5 Year 6 Year 7 C/F C/F C/F C/F C/F C/F -80 20 25 30 35 40 -80 25 25 25 25 25 Project Alpha Beta NPV Year (a) Calculate the net present value (NPV) and IRR of Alpha and Beta. 0 1 2 2. Camcor Inc. is considering two mutually exclusive projects. The required rate of return for both projects is 15%. 3 4 a) Calculate the Payback Period for each project. Project A Cash flows (175,000) 65,000 85,000 75,000 IRR 55,000 Project B Cash flows (280,000) 100,000 140,000 N/A 25 120,000 80,000 C/F N/A 25 Discount Rate 15% 16%

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