Use the table below to answer questions 1 - 5. Use the present value and annuity tables to answer questions 8 - 10. (10 Points Each) Project Year B Initial Investment -20000 -10000 -18000 1 1000 3000 8000 2 3000 3000 8000 3 8000 4000 7000 4 8000 4000 1000 12000 4000 1000 5 Net Present Value @ 7% Net Present Value @ 14% Internal Rate of Return 4434 -446 13.3% 4292 1830 21.8% 3415 886 17.1% 1. 2. If the three projects are all feasible and mutually exclusive, which is preferred under the net present value criterion when the cost of capital is 7%? If the three projects are all feasible and mutually exclusive, which is preferred under net present value criterion when the cost of capital is 14%? If the three projects are all feasible and mutually exclusive, which is preferred under the internal rate of return criterion? 3. 4. 5. If the three projects are all feasible and not mutually exclusive, use the present value criterion to determine which should be undertaken when the cost of capital is 14% and there is no constraint on the amount that can be invested. What will be the net present value of Project A if the initial investment increases to $25,000 when the cost of capital is 14%? If the rate of inflation increases, will we expect interest rates to increase or decrease? If all other factors are unchanged, will an increase in interest rates increase or decrease the value of a firm? 6. 7. 8. What is the annual payment on a 5-year loan of $10,000 at 8% interest? 9. What is the present value of $10,000 received 10 years from now if the cost of capital is 6%? 10. What will be the change in the value of a firm if a $100,000 payment expected today will be delayed by one year with a discount rate is 10%