1.Consider the following two projects: Project C/F0 C/F1 C/F2 C/F3 C/F4 C/F5 C/F6 C/F7 Discount Rate Alpha -79 20 25 30 35 40 N/A N/A 15% Beta -80 25 25 25 25 25 25 25 16% 1) The net present value (NPV) for project alpha is closest to: A)$20.96 B) $14.41 C)$24.01 D) $16.92

2.The cash flows for four projects are shown below, along with the cost of capital for these projects. If these projects are mutually exclusive, which one should be taken? A)Year: 0 1 2 3 4 5 Cash flow: -$5000 $2000 $2000 $2000 $2000 $2000 Cost of Capital: 6%

B)Year: 0 1 2 3 4 5

Cash flow: -$6000 $2500 $2500 $2500 $2500 2,00

Cost of Capital: 7% C)Year: 0 1 2 3 4 5 Cash flow: -$7000 $3000 $3000 $3000 $3000 $3000 Cost of Capital: 8% D)Year: 0 1 2 3 4 5 Cash flow: -$8000 $3200 $3200 $3200 $3200 $3200 Cost of Capital: 9%

3.Time: 0 1 2 3 Investment A: -$1 million $300,000 $400,000 $500,000 Investment B: -$1 million $500,000 $400,000 $300,000 An investor is considering the two investments shown above. Her cost of capital is 9%. Which of the following statements about these investments is true? A)The investor should take investment B since it has a greater net present value (NPV). B)The investor should take investment B since it has a greater internal rate of return (IRR). C)The investor should take investment A since it has a greater internal rate of return (IRR). D)The investor should take investment A since it has a greater net present value (NPV).