Use the Figure below that shows the net present value profile of two projects Y and W to answer the following questions:

1. What is the internal rate of return on project Y? (2 marks)

2. Determine the approximate discount rate at which you would be indifferent between the two projects (1 mark)

3. Find the approximate net present value of project W when the discount rate is 4%. (1 mark)

4. If the future cash flows of project W over its four-year life are $880, $1250, $1000, and $6600 estimate the initial investment. (2 marks)

NPV Profiles 7000.00 6000.00 5000.00 4000.00 NPV(W) ---NPV (Y) 3000.00 2000.00 Net Present Value 1000.00 0.00 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% -1000.00 -2000.00 -3000.00 -4000.00 -5000.00 Discount Rate