ANSWER ALL THE QUESTIONS 1.

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Company is evaluating two projects, Project A and Project B. The initial investment on both the projects are $25,000. Both have equal lives. The Project A will generate cash flows of $20,000 and $35,000 in year 2 and year 3. The Project B will generate $15,000 in year- 1, $22,000 year-2, and $25,000 in year-3. If the required rate of return is 12%, then which project has the highest annual present worth (APW). a. b. APW of project B is the highest APW of project B is more than Project A by $3,267.43 APW of project A is more than Project B by $3,267.43 APW of project B is 23,725.63 c. d. Current assets and Current liabilities of Company $2,325,000 and $956,000 respectively. Company is going to increase the inventory by taking short-term note. The current ratio should not exceed 2. What is the maximum amount of inventory that can be increased? a. $413,000 b. $206,500 c. $826,000 d. $478,000 Nominal rate of return is 10.80%. Inflation rate is 6.95%. What is the real rate of return as per Fisher equation? a) 4.80% b) 17.75% c) 6.95% d) 3.60%