Question 6

A project has expected cash inflows, starting with year 1, of $2,200, $2,900, $3,500 and finally in year four, $4,000. The profitability index is 1.14 and the discount rate is 12 percent. What is the initial cost of the project?

Group of answer choices

$9,211.06

$9,250.00

$8,166.19

$7,899.16

$8,098.24

Question 7

Chestnut Tree Farms has identified the following two mutually exclusive projects:

Year	Cash Flow (A)	Cash Flow (B)
0	-$50,000	-$50,000
1	$35,000	$15,000
2	$8,000	$13,000
3	$7,000	$15,000
4	$6,000	$20,000

If forced to choose one of the two projects above, over what range of discount rates would you choose Project A?

Group of answer choices

12.32 percent or less

12.32 percent or more

13.16 percent or less

13.98 percent or less

13.98 percent or more