Question: Cash Flows ($ mln) CF1 CF4 CFO -12.55 CF2 4.75 CF3 4.75 4.75 4.75 Projects Alpha Beta Gamma -8.25 3.85 4.75 4.95 0 -6.25 0

Cash Flows ($ mln) CF1 CF4 CFO -12.55 CF2 4.75 CF3

Cash Flows ($ mln) CF1 CF4 CFO -12.55 CF2 4.75 CF3 4.75 4.75 4.75 Projects Alpha Beta Gamma -8.25 3.85 4.75 4.95 0 -6.25 0 0 0 12.75 43.95 Delta -24.95 0 0 0 Popcorn Corp. is considering the above four mutually exclusive projects. The firm has a marginal tax rate of 25%, an average tax rate of 17.5% and a WACC of 7.25%. Project Gamma has an internal rate of return of % and we should, therefore project Gamma

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