1. Consider the following capital budgeting problem, you invest 100 in a machine and expect to receive $27 in each of the next three years. The discount rate is 10%.

Suppose you decide to invest in the machine. What would you be willing to sell the machine for the day after you bought it for $100?

2. The following question is a general question testing your understanding of what we are calculating.

Consider the following capital budgeting problem, you invest 100 and expect to receive $50 in each of the next three years. The discount rate is 10%. What is the initial cost of the project, how much value is created and what would you be willing to sell the project for?