Answer Questions 2,3,5, and 6

2. Payback (S5.2) Consider the following projects: a. If the opportunity cost of capital is 10%, which projects have a positive NPV? b. Calculate the payback period for each project. c. Which project(s) would a firm using the payback rule accept if the cutoff period is three years? 3. Payback and Accounting Rate of Return (S5.2) In Section 5.1 [ , we listed five key features of the NPV rule. Which of these features characterize the payback rule? What about the accounting rate of return rule? 5. IRR (S5.3) Write down the equation defining a project's internal rate of return (IRR). In practice, how is IRR calculated? 6. IRR (S5.3) Page 141 a. Calculate the net present value of the following project for discount rates of 0,50 , and 100% : b. What is the IRR of the project