The potential projects that Packard is considering have the following expected cash flows. Each project has its own unique risk and as such, the beta on each project is given. Using the data from #2 for the risk-free rate and market risk premium, what is the required percentage return for each of the projects? Show the required returns to 2 decimals, that is xx.xx%. You will use these rates when analyzing each project in the next part of the assignment, these are the required rates of return for Problems 4-6). (8 pts)

#3	Project A	Project B	Project C	Project D
Beta	0.9	1.6	1.7	1.5
Req. return (show work)

Use for Problems 4-7. For each project, calculate the NPV, IRR, profitability index (PI) and the payback period. For each capital budgeting decision tool, indicate if the project should be accepted or rejected, assuming that each project is independent of the others. Important Note: The venture capital folks, when considering payback period, have a firm maximum payback period of four years.This 4-year payback period has no impact on other capital budgeting analysis techniques, each is to be considered on its own. In other words, yes, all cash flows need to be considered for NPV, IRR, and PI.

Expected cash flows for the four potential projects that Packard is considering as shown below:

Year	Project A	Project B	Project C	Project D
0	-$9,000,000	-$8,000,000	-$7,500,000	-$6,000,000
1	$2,000,000	$3,000,000	$2,000,000	$1,000,000
2	$2,000,000	$2,000,000	$2,000,000	$2,000,000
3	$2,000,000	$2,000,000	$1,500,000	$2,000,000
4	$2,000,000	$1,200,000	$1,500,000	$1,000,000
5	$2,000,000	$1,200,000	$2,500,000	$1,000,000
6	$2,000,000	$500,000	$2,500,000	$1,000,000
7	$2,000,000	$500,000		$1,000,000
8		$500,000		$1,000,000
9		$250,000		$500,000
10				$500,000

I have provided a suggested template for your final answers. Below the grid is where you should show all your required backup calculations (this means your cash flow register inputs, the interest rate, PI calculation and cumulative cash flows for payback). If you are working this in Excel, feel free to submit your Excel sheet, where the equations in the cells will provide the required backup. Be sure to clearly indicate the required rate of return for each project (you calculated each in Problem 3).

Remember that each capital budgeting method should be calculated and analyzed on a stand-alone basis.

		Year	Project A	Project B	Project C	Project D
Points		Req. Return(use 2 decimals xx.xx%)
6	4a	NPV(to nearest $1)
2	4b	NPV accept/reject
4	5a	IRR (xx.xx%)
2	5b	IRR accept/reject
4	6a	PI(show 2 decimals, x.xx)
2	6b	PI accept/reject
4	7a	Payback Period(x.x years)
2	7b	Payback accept/reject