Question: 12. (10) For the following projects the Net Present Value and the Internal Rates of Return have been calculated: X Y Z Cost (Io) 400

12. (10) For the following projects the Net Present Value and the Internal Rates of Return have been calculated:

X Y Z

Cost (Io) 400 400 400

NPV @10% $ 172 94 145

NPV @23% $ [Negative] 15 27

IRR 20% 27% 29%

a. If X is a lease of a flower shop, Y is the lease of the same flower shop with a different management company, and Z is the purchase of the same flower shop, and the firm has $800 to invest

Which project(s) would be accepted at:

10% cost of capital:

23% cost of capital:

If X is an auto shop, Y is a restaurant, and Z is a flower shop, and the firm has $800 to invest

Which project(s) would be accepted at:

10% cost of capital:

23% cost of capital:

c. (as in b. above) If X is an auto shop, Y is a restaurant, and Z is a flower shop, and the firm has $1,200 to invest.

Which project(s) would be accepted at:

10% cost of capital:

23% cost of capital:

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