Use an Excel spreadsheet to solve these problems. Also refer to the documents about investment criteria. 1. Find the Internal Rate of Return for the following three investments. Year Inv. 1 Inv. 2 Inv. 3 0 $(1,500) $(2,500) $(3,500) 1 $ 800 $ 1,100 $ 1,200 2 $ 700 $ 1,000 $ 1,200 3 $ 600 $ 900 $ 1,200 4 $ 500 $ 800 $ 1,200 2. Now find the net present value of each of these investments using the following costs of capital: a. 16% b. 18% c. 14% d. The IRR for Investment 1 e. The IRR for Investment 2 f. The IRR for Investment 3 3. Describe the relationship between the net present values and costs of capital for each of the investments, as well as between the costs of capital used and the IRR for each investment. For problems 4 through 8, use the Profitability Index equation, PI = Sum of the PV of cash flows divided by the initial investment. 4. An investment cost $9,000 and the sum of the pv of its cash flows is $11.750. What is the investments Profitability Index? 5. Another investment that cost $9,000 has a Profitability Index of 0.85. What is the sum of the pvs of this investments cash flows? 6. An investment has a Profitability Index of 1.00. If the sum of the pvs of this investment is $10,250, how much did it cost? 7. An investment cost $16,000 and has a Profitability Index of 1.10. What is the net present value for this investment? 8. Investment A cost $500,000 and has a Profitability Index of 1.25, while Investment B, which cost $1 million, has a Profitability Index of only 1.18. If you chose Investment A, however, how much would you be missing out on in terms of net present value? 9. An investment has two Internal Rates of Return, 15% and 28%. Describe how you would determine the range of costs of capital that would return a positive net present value for this investment. 10. Investment A and B cost the same, but Investment Bs IRR is 24% while Investment As is 18%. At a cost of capital of 15%, however, the net present value of the two projects is the same. What range of costs of capital would cause you to: a. Choose Investment A b. Choose Investment B 11. You are choosing between two investments, X and Y, which cost the same but have different cash flows in each of their 5-year lives. All you know about these cas flows is the difference between Xs and Ys cash flows in each of those 5 years. Your cost of capital is 16%. You only have enough funding for one of the investments, so how would you determine which one to choose?