1) A project costs $150,000 and generates a cash flow of $75000 in year 1,$25000 in year 2 and then $10000 in year 3 through 10. What is the payback of the project?

a) 5 years

b) 6 years

c) 8 years

d) 7 years

2) A project requires an initial outflow of $100,000 and is expected to produce $20000 inflows over each of the next ten years. If the required return of the project is 8%, what is its profitablility index?

a) 2.88

b) 5

c) 10

d) 1.34