Do not round numbers in intermediate stops. Each problem is worth 10 polnts. If a problem has more than one question, answer each question. 1. A company is considering a project that has the following cash flow and WACC data. Note: CFO, CF2, and CF4 aro negative Should the company take on this project if its WACC is 15? Justify your answer using NPV, IRR, and MIRR. WACC: 15% Year 0 1 2 3 4 Cash flows - $15,000 $25,000 $2,000 $12,000 $1,000 2. MNM & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. What is the crossover rate and what does it tell management? WACC: 9% 0 2 3 4 1 $950 CFS $750 $550 $350 -$1,000 -$1,000 CFL $500 $600 $700 $1000 3. XYZ Co. is considering a new investment in a project whose data are shown below. The equipment would be fully depreciated on a straight-line basis over the project's 3-year life and would require additional net operating working capital that would be recovered at the end of the project's life. The company owns the building where this equipment will be operational. The company currently has an offer from a competitor to buy said building for $100,000 from XYZ If it decides not to acquire the equipment and move forward with the project. Revenues and other operating costs are expected to be constant over the project's life. What is the initial investment the company must make in Year 07 12% $200,000 $50,000 WACC Net investment in fixed assets (depreciable basis) Required net operating working capital adjustments Straight-line depreciation rate Annual sales revenues Annual operating costs (excl. depr.) Tax rate 33.333% $150,000 $115,000 21%