1. Which of the following comes closest to the profitability index (PI) of a project that requires an initial investment of $100 and produces a single cash flow of $160 at the end of year 10 if the required rate of return is 10%?

	a.	0.52
	b.	0.62
	c.	0.56
	d.	0.43
	e.	0.47

2. In class I offered one of two trades: (1) you give me $0.25 and Ill give you $0.50, or (2) you give me $1.00 and Ill give you $1.50. What was the main point of this example?

	a.	The impact of real options on the capital budgeting decision
	b.	The many shortcomings of the payback rule
	c.	The relationship between NPV and IRR
	d.	The payoff of a typical call option
	e.	The Monte Hall dilemma