Deere Inc. is considering a capital expansion project. The initial investment of undertaking this project is $411,610. This expansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $61,492, $37,360, $204,663, $334,692 and $267,411 respectively.

Deere has a weighted average cost of capital of 21%.

Based on Deere's weighted average cost of capital, what is the NPV of undertaking this expansion project? That is, what is the NPV if the weighted average cost of capital is used as the discount rate? Shall Deere undertake the investment project?

Question 2 options:

	NPV=$32,635.50. Deere shall undertake the investment project since NPV>0.
	NPV=$39,488.95. Deere shall undertake the investment project since NPV>0.
	NPV=$98,801.60. Deere shall undertake the investment project since NPV>0.
	NPV=$494,008.00. Deere shall undertake the investment project since NPV>0.

Question 3 (3.57 points)

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Based on Deere's weighted average cost of capital, what is the profitability index (PI)of undertaking this project? That is, what is the profitability index if the weighted average cost of capital is used as the discount rate? Shall Deere undertake the investment project?

Question 3 options:

	PI=1.079. Deere shall undertake the investment project since PI>1.
	PI=1.240. Deere shall undertake the investment project since PI>1.
	PI= 1.096. Deere shall undertake the investment project since PI>1.
	PI=2.200. Deere shall undertake the investment project since PI>1.

Question 4 (3.57 points)

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What is the internal rate of return (IRR) if Deere undertakes this project? Based on the IRR, shall Deere undertake this investment project assuming the weighted average cost of capital is the appropriate discount rate for the capital budgeting problems considered?

Question 4 options:

	IRR=24.21%. Deere undertake the investment project since IRR>WACC.
	IRR=23.60%. Deere shall undertake the investment project since IRR>WACC.
	IRR=22.78%. Deere shall undertake the investment project since IRR>WACC.
	IRR=25.81%. Deere shall undertake the investment project since IRR>WACC.

Question 5 (3.57 points)

What is the modified internal rate of return (MIRR) if Deere undertakes this project? Assuming that the positive cash inflow from undertaking this project will be reinvested at the weighted average cost of capital.

Question 5 options:

	22.07%
	25.28%
	23.24%
	24.16%