1. A project manager is working on justification of a project. Since very little information is known about the project, some rough estimates have been gathered. Following table is prepared to show the cash inflow and outflow for the following years: What is the payback period for this project? 2. If the required rate of return is 10%, is the project mentioned above acceptable? Use NPV. 3. Calculate profitability index to determine if the project acceptable. Use 10% interest rate. 4. Assume that you are going to select one of the two projects and applied different selection methods. For each method, explain which project is preferable? 5. In a project, an initial investment of $8,300 equipment is expected to generate net cash inflow of $3,400,$4,000,$5,800 and $2,050 at the end of first, second, third and fourth year respectively. At the end of the fourth year, equipment would be sold for $900. Calculate the net present value of the investment if the discount rate is 18% and explain if the project is acceptable. 6. In the previous question, assume that there will be 5% inflation rate in the next four years. Reconsider if the project is acceptable or not? 7. You are asked to choose between two projects A or B based on the highest gain (or the lowest loss). A will cost U.S. $800,000 and B will cost U.S. $600,000. There is a 60% chance that project A will be successful, which will result in a gain of U.S. $2,000,000. If project A fails there will be a loss of U.S. $700,000. There is a 70% project B will be successful. If Project B fails there will be a loss of U.S. $800,000. Based on this information: a. Draw the decision tree of the projects. b. What is the minimum gain of project B in order to be a better option than project A