1. A two year project requires a $70,000 initial investment. In the following two year it will generate positive cash flow: $40,000 in the first year and $50,000 and in the second . a. Calculate the project Net Present Value if the discount rate is 17% ? Try 18% ? b. From the results in a, can you guess a possible range for IRR? c. What is the project IRR (you can use excel for this, however, if you consider: x=1+IRR1, you can write the problem as a quadratic function and solve manually) 2. A project equipment cost is $120,000 and it will last 5 years. The equipment is depreciated over 4 (no depreciation in the fifth year) years with equal weight towards a $20,000 salvage value (straight line). Cash sales are $150,000 per year and costs of goods sold (COGS) are $90,000. The appropriate discount rate is 16% and the corporate tax rate is 21%. Calculate the project net present value and determine whether the project should be accepted or rejected. 3. A gadget production factory will cost $1.2 million. It is expected to last four years. Depreciation is toward a $200,000 salvage value, which is recovered in the fourth year. For depreciation use the three years MACRS (below). Sales are expected to be $2.0 million per year, with 60% cost of goods sold and $300,000 annual fixed cost in all operating years. Assuming 12% discount rate and 21% tax rate: a. Should the firm accept the project? b. The project will require a working capital commitment of $400,000 in the initial year. Evaluate the project net present value, should the firm accept the project