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1. FOR THIS AND THE NEXT 4 QUESTIONS. Consider the following mutually exclusive projects. Cost of capital for both projects is 12.5%. Calculate Modified Internal Rate of Return (MIRR).

   Year	Project A	Project B
   0	-$100,000	-$100,000
   1	20,000	74,000
   2	40,000	55,000
   3	85,000	42,000
   4	120,000	40,000

   A. Project A: 38.45%; Project B: 45.02%

   B. Project A: 31.03%; Project B: 27.25%

   C. Project A: 31.03%; Project B: 45.02%

   D. None of the above

QUESTION 2

1. For the above mutually exclusive projects, calculate Profitability Index (PI).

   A. Project A: 1.84; Project B: 1.64

   B. Project A: 3.84; Project B: 4.502

   C. Project A: 3.103; Project B: 1.64

   D. None of the above

QUESTION 3

1. If the firm's goal is to maximize the value of its investments, which project(s) should be selected, and why?

   A. Project B. Its NPV is greater

   B. Project B. Its IRR is higher.

   C. Both projects. Both have positive NPV.

   D. Project A. Its NPV is greater.

   E. Both projects. Each project's IRR exceeds the cost of capital.

   F. None of the above is correct.

QUESTION 4

1. What is the projects' crossover rate?

   A. 26.92%

   B. 45.02%

   C. 38.45%

   D. None of the above

QUESTION 5

1. Calculator the payback period for Project A only.

   A. 2.85 years

   B. 2.47 years

   C. 3.85 years

   D. None of the above