1. Consider the following two mutually exclusive projects: You require a 15% return on your investment.

a) If you apply the payback criterion, which investment will you choose? Why? b) If you apply the NPV criterion, which investment will you choose? Why? c) If you apply the IRR criterion, which investment will you choose? Why? d) Based on your answers in A, B, and C, which project will you finally choose? Why? 2. Belgravia Petroleum Inc. is trying to evaluate a project with the following cash flows:

a) As a financial manager, do you suggest they evaluate the project using NPV, IRR, or both? Why? b) Should the company accept this project if it requires a 12% return on its investments? Why? 3. Based on the following information: For its most recent year a company had Sales (all on credit) of $83,000 and Cost of Goods Sold of $52,500. At the beginning of the year, its Accounts Receivable were $8,000 and its Inventory was $10,000. At the end of the year, its Accounts Receivable were $30,000 and its Inventory was $80,000 (above). Calculate the following ratios: a) Company working capital b) Current ratio c) Quick ratio d) Inventory turnover e) Receivable turnover 4. To measure a firm's solvency as completely as possible, we need to consider a) The firm's relative proportion of debt and equity in its capital structure b) The firm's capital structure and the liquidity of its current assets c) The firm's ability to use Net Working Capital to pay off its current liabilities d) The firms leverage and its ability to make interest payments on its long-term debt e) The firm leverage and its ability to turn its assets over into sales 5. At an interest rate of 10%, what is present value of $1m to be received in 50 years. 6. If you invest $5000 today , how much you will have in 22 years using rate of 9%? 7. You are planning to double your money to $15,000 with the rate of 8%, how long it will take?