Question: 1. Use the table for the question(s) below. Project Cash flow today ($ million) Cash flow in one year ($ million) Eenie -10 15 Meenie

1. Use the table for the question(s) below.

Project

Cash flow today ($ million)

Cash flow
in one year ($ million)

Eenie

-10

15

Meenie

10

-8

Mighty

-15

20

Moe

10

-15


If the risk-free interest rate is 10%, then of the four projects listed, if you could only invest in one project, which one would you select?

Mighty

Eenie

Moe

Meenie

2. Which of the following is (are) deducted from EBIT to determine pretax income?

Earnings per share

Interest expense

Corporate taxes

Both Interest expense and Corporate taxes

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