Please answer it on the space provided in yellow with formulas as well.

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Chapter 10 Problems Problem 2 An independent capital budgeting project is expected to have the following cash flows: Year Cash Flows 0 1 2 3 4 Required Rate of Return Cumulative Payback Period -$500,000 $100,000 $150,000 $250,000 $300,000 11% Compute the payback period: Payback Period Compute the discounted payback period using an 11 percent required rate of return. Discounted Payback Period Should the project be accepted? Explain your answer. Problem 4 An independent capital budgeting project is expected to have the following cash flows: Year 0 1 2 3 Required Rate of Return Cash Flows -$225,000 $75,000 $125,000 $200,000 17% Compute the net present value at a 17 percent required rate of return: Net Present Value (NPV) Compute the profitability index at a 17 percent required rate of return: Profitability Index Should the project be accepted? Explain your answer. Problem 7 The following table shows the cash flows for two mutually exclusive capital budgeting projects. The required rate of return for 10 percent. Year 0 1 2 3 Project X Cash Flows -$120,000 $100,000 $40,000 $10,000 Required Rate of Return Project Y Cash Flows -$120,000 $20,000 $50,000 $100,000 10% Compute the net present value for both projects: Net Present Value (NPV) Compute the internal rate of return for both projects: Internal Rate of Return (IRR) Compute the modified internal rate of return for both projects: Modified Internal Rate of Return Which project shoud be accepted? What causes the net present value and internal rate of return to rank the projects differently? Problem 8 The following table shows the cash flows for two mutually exclusive capital budgeting projects The required rate of return for both projects is 13 percent. Year 0 1 2 3 Project P Cash Flows -$250,000 $0 $0 $0 Project Q Cash Flows -$250,000 $120,000 $120,000 $120,000 4 5 $0 $900,000 Required Rate of Return $120,000 $120,000 13% Compute the net present value for both projects: Net Present Value (NPV) Compute the internal rate of return for both projects: Internal Rate of Return (IRR) Compute the modified internal rate of return for both projects: Modified Internal Rate of Return Which project shoud be accepted? What causes the net present value and internal rate of return to rank the projects differently? Cumulative Discounted Payback Period The required rate of return for both projects is