1. The primary idea behind the net present value rule is that an investment: a. Is worthwhile if it creates value for the owners. b. Must have total cash flows that equal zero. c. Should be accepted if it enhances management's position. d. Should break-even from an accounting point of view. c. Should earn a rate of return that is less than the discount rate. 2. A project has an initial cash outlay of S29,500. Cash inflows are estimated at $1,200, 56,900, S7,800, S9,500, and 54,800 for years 1 through 5, respectively. What is the net present value of this project given a 7% discount rate? a. -55,677.15 b. -$5,314.82 c.-S2,618.03 d. $700.00 c. $1,806,33 3. Kim Lee is analyzing two projects. The first requires a $1,200 initial investment and returns $600 a year for four years. The second project requires a $1,500 initial investment and returns $700 a year for four years. What is the crossover point for these two projects? a. 4.25% b. 6.37% c. 8.14% d. 12.59% e. The crossover point cannot be computed based on the information provided 4. A firm has 200,000 shares outstanding. If three directors will be elected, how many shares do you need to control to assure yourself a seat on the board under cumulative voting procedures? A) 30,001 B) 40,001 C) 50,001 D) 66,668 E) 100,001 5. You are going to withdraw $1,000 at the end of each year for the next three years from an account that pays interest at a rate of 8% compounded annually. How much must there be in the account today in order for the account to reduce to a balance of zero after the last withdrawal? A) $793.83 B) $2,577.10 C) $2,602.29 D) $2,713.75 E) S2,775.67