Question 1.

a) Determine the Net Present Value(NPV) a project that costs $104,000 and would yield after-tax cash flows of $16,000 the first year, $18,000 the second year, $21,000 the third year, $23,000 the fourth year, $27,000 the fifth year, and $33,000 the sixth year. Your firm's cost of capital is 12.00%. (5 marks)

b)Give an explanation for your decision regarding the project (3 marks)

Question 2

Project Rio Tinto requires an initial investment of $45,000 and is expected to generate $30,000 per year for two years. What is the NPV if the discount rate is 8%?(4 marks)

Question 3.

a) Determine the Payback Period for a project that costs $120,000 and would yield after-tax cash flows of $20,000 the first year, $22,000 the second year, $25,000 the third year, $27,000 the fourth year, $31,000 the fifth year, and $37,000 the sixth year.(5 marks)

b)Give an explanation for your decision regarding the project (3 marks)

Question 4. A business purchases a new form of information system technology for $500,000. Because of this purchase, the company begins earning $50,000 a year. Find the Return on Investment for the first three (3) years. (5 marks)

b)Give an explanation for your decision regarding the project (3 marks)