1. If you deposit K8, 700 at the beginning of the year in a bank and receive K10, 200 at the end of the year, how much is the interest rate? [2 marks] 2. Excellence Business Centre Plc is trying to decide between two expansion projects. It has the following data available from the projects department. All units are $000's. [5 marks] Project A has a capital cost (in year 0) of K400, 000 Project B has a capital cost (in year 0) of K700, 000 Year Cash inflow Project A Cash inflow Project B 1 50 100 2 100 300 3 150 500 4 200 300 5 100 200 Using undiscounted payback period method, which project should be chosen? 3. Salem Co is considering a project that produces annual net cash inflows of K420, 000 for years 1 through 5 and a net cash inflow of K100, 000 in year 6. The project will require an initial investment of K1, 800, 000. Salem's cost of capital is 10%. Calculate the discounted pay-back period. [5 marks] 4. Suppose that the cash inflows from a project from year 1 to year 4 are K10,000, K12,000. K12,500, and K1 1,000. The interest rate for year 1 is 10% and it will increase by 1% annually after year 1. Calculate the present value of the cash inflows. [3 marks]