Mars Technologies is considering setting up a plant in a foreign country. The plant will have an estimated useful life of four years and the estimated costs of setting it up are $20 million. The companys CFO has estimated the following cash flows associated with the new plant:

Year 1 = $5.8 million

Year 2 = $7.9 million

Year 3 = $8.6 million

Year 4 = $10.5 million

The company is concerned about its current sales to another country, which are expected to be reduced by $1,200,000 for each of the four years as a result of setting up the plant. Given that the companys required rate of return is 12%, the NPV of the project is closest to:

	$0.63 million.
	$4.27 million.
	$2.27 million.

Sun Technologies is considering investing in two projects, A and B, that require an initial outlay of $4 million and $5.5 million, respectively. The company requires a rate of return of 24% on its investments. Cash flows associated with the two projects are as follows:

Years	1	2	3	4
Project A ($ millions)	1.8	2.4	2.8	2.1
Project B ($ millions)	1.5	1.8	2.4	3.2

Which of the following statements is most accurate?

The company should invest in:

	Project A only, because Project Bs IRR is less than the required rate of return.
	Project B only, because Project-As IRR is less than the required rate of return.
	Both projects, because their IRRs are more than the required rate of return.

Malcolm Technologies directors are considering the purchase of a subsidiary for $90 million. The present value of the future after-tax cash flows associated with the subsidiary is estimated to be $120 million. This is new information and is independent of other expectations regarding the company. The company has 3 million shares outstanding at the market price of $50. If the company goes ahead with the purchase, a market price of the companys stock will be closest to:

	$60
	$55
	$40