Question A

Refer to the Table above. Which one would be selected if the payback evaluation technique were used?

	Project 1
	Project 2
	Project 1 and Project 2 has same payback period
	Neither, since we don't required rate of return on two projects

PART B

Refer to the table above. Which project shall you take if the cost of capital is 12%

	Project 1
	Project 2
	We cannot make decision since we do not know IRR
	Neither, since the NPV is negative for both projects

PART C

Refer to the table above. We are indifferent between select project 1 and project if the cost of capital is _____

	13.26%
	17.67%
	21.22%
	37.86%

Project 1 Project 2 Year 0 -$10,000 -$5,000 Year 1 $3,000 $3,000 Year 2 $5,000 $3,000 Year 3 $8,000 $3,000