1. Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate cash flows of $49,500 per year for the next 8 years, at which time (end of Year 8) the company will pay $50,000 to another for clean-up and disposal. What is the Profitability Index (PI) of the project if shareholders demand a 16.295% return? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088.

2. Given the advantages and disadvantages outlined below, which decision criteria (A, B, or D) is Internal Rate of Return (IRR)?

Criteria	Advantage	Disadvantage
A	Easy to understand. Quick computation. May be best option for small-budget projects.	Does not account for all cash flows. Does not account for time value of money.
B	Accounts for all cash flows and provides same accept/reject decision as NPV for conventional cash flows on independent projects.	Cash flows may generate multiple results. Cannot be used to rank mutually exclusive projects. High results may not be best.
D	Accounts for all cash flows as well as the time value of money. Can be used under budget constraints.	In isolation may lead to improper ordering of projects.

3. Given the advantages and disadvantages outlined below, which decision criteria (A, C, or D) is Profitability Index (PI)?

Criteria	Advantage	Disadvantage
A	Easy to understand. Quick computation. May be best option for small-budget projects.	Does not account for all cash flows. Does not account for time value of money.
C	Accounts for all cash flows as well as the time value of money.	My require a tweak in order to make appropriate choices under budget constraints.
D	Accounts for all cash flows as well as the time value of money. Can be used under budget constraints.	In isolation may lead to improper ordering of projects.