Use the information below answer questions 1-3: Management is considering five different projects (Alpha, Beta, Delta, Gamma, Theta) There are no cash flows to consider besides the initial cash outlay and the payoff All payoffs are expected in two years Project Alpha Beta Delta Gamma Theta Probabilty [Failure] 80% 60% 50% 40% 20% Payoff [Success] $ 320 $ 280 $ 400 $ 150 $ 150 Payoff [Failure] $ 280$ $ 200 $ $ 190 $ $ 140 $ $ 120 $ Initial Outlay (200) (200) (200) (100) (100) Management's primary objective is to maximize NPV Management can pursue multiple projects as long as the creditor is willing to make the loan The creditor will not allow management to pursue any project, or combination of projects, that put the creditor's principle at risk The creditor offers the company $200M today and expects no payments over the next 24 months, but does expect $242M to be repaid in full at the end of year two 1. The creditors offer is best described as a(n): a. Fully Amortizing Loan b. Zero Coupon Bond c. Interest Only Loan d. Municipal Bond e. Sinking Fund 2. Which project(s) would management most likely want to pursue, but creditors not allow: a. Beta b. Delta c. Gamma d. Beta, Delta e. Delta, Gamma, Theta