3. 22.

Cash flow intuition [LO 9.1, LO 9.2] A project has an initial cost of I, a required return of R and pays C annually for N years.

1. Find C in terms of I and N such that the project has a payback period just equal to its life.

2. Find C in terms of I, N and R such that this is a profitable project according to the NPV decision rule.

3. Find C in terms of I, N and R such that the project has a benefitcost ratio of 2.