A new project that is being considered requires an initial investment of $375,000. The expected future cash flows are $250,000 per year for four years. Assume the appropriate discount rate is 15%. a. What is the NPV? b. Suppose that the firm thats considering this project has a market value of $2.2 million. If the firm accepts this project, what will be the firms new market value? c. What is the IRR? d. What is the discounted payback period? Include partial periods (e.g., x.xx years) in your response. 7. A firm is considering a mining project with the following cash flows (with the final cash flow being negative, perhaps due to an extensive land reclamation in the projects final year): C0 = $420, C1 = $420, C2 = $462, C3 = $546, C4 = $420, and C5 = $1554. (a) From among the following multiple-choice answers, calculate this projects internal rate(s) of return: 5.070%, 25.225%, 33.333%, 51.909%, 82.425%. (2 pts.) (b) If the required return is 30.000%, should the project be rejected or accepted? Briefly, clearly justify and explain your reasoning. (2 pts.)

MACRS Depreciation Percentages -- Half-Year Convention RECOVERY PROPERTY CLASS

YEAR 3-YEAR 5-YEAR 7-YEAR

1 33.33% 20.00% 14.29%

2 44.45 32.00 24.49

3 14.81 19.20 17.49

4 7.41 11.52 12.49

5 11.52 8.93

6 5.76 8.92

7 8.93

8 4.46

Totals 100.00% 100.00% 100.00%