1.

Global Toys, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available.

Year	Cash Flow A		Cash Flow B
0	-$	61,000	$	106,000
1		25,000		27,000
2		32,600		32,000
3		27,000		27,000
4		13,000		234,000

Requirement 1:

What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Payback period
Project A	years
Project B	years

Requirement 2:

Should it accept either of them?

2. A firm evaluates all of its projects by applying the IRR rule.

Year	Cash Flow
0	$	161,000
1		55,000
2		84,000
3		68,000

Requirement 1:

What is the project's IRR? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Internal rate of return

%

Requirement 2:

If the required return is 12 percent, should the firm accept the project?

3. For the given cash flows, suppose the firm uses the NPV decision rule.

Year	Cash Flow
0	$	151,000
1		65,000
2		74,000
3		58,000

Requirement 1:

At a required return of 11 percent, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

NPV

$

Requirement 2:

At a required return of 22 percent, what is the NPV of the project? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

NPV

$

4.

Kerron Company is presented with the following two mutually exclusive projects. The required return for both projects is 14 percent.

Year	Project M	Project N
0	$137,000	$358,000
1	63,800	151,000
2	81,800	183,000
3	72,800	136,000
4	58,800	113,000

Required:
(a)	What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

	IRR
Project M	%
Project N	%

(b)	What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	NPV
Project M	$
Project N	$

(c)	Which, if either, of the projects should the company accept?