1.) Decisions-Decisions, Inc. is evaluating three potential projects. Given their Cash flows and NPVs shown below, the fact that the firm can invest no more than $30 million, and the hurdle rate (cost of capital) is 8%, which is (are) the project(s) the firm should invest in? Project 1: -14 (Year 0), 30 (Year 1), 46 (Year 2); 53.22 (NPV). Project 2: -15 (Year 0), 35 (Year 1), 63 (Year 2); 71.42 (NPV). Project 3: -29 (Year 0), 68 (Year 1), 94 (Year 2); 114.55 (NPV). (Projects cash flows and NPVs are in millions)

A.	projects 1 and 3
	B.	only project 2
	C.	projects 1 and 2
	D.	only project 3
	E.

2.) A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below. Project S: -1,100 (Year 0), 1000 (Year 1), 350 (Year 2), 50 (Year 3). Project L: -1,100 (Year 0), 0 (Year 1), 300 (Year 2), 1,500 (Year 3). Which project should be chosen and why? (You may want to use your calculation results from the other two related questions or work on them first.)

A.	Both, because both projects have positive NPV and their IRRs are both higher than cost of capital, 12 percent.
	B.	L, because it has higher IRR, which is also higher than the cost of capital, 12 percent.
	C.	S, because it has higher IRR, which is also higher than the cost of capital, 12 percent.
	D.	L, because it has higher NPV, which is also positive.
	E.	S, because it has higher NPV, which is also positive.