1) In the Real World, what is the correct order of activities?

1?Calculate the NPV.

2?Estimate the WACC.

3?Calculate the AFN.

A. 1), 2), 3).

B. 1), 3), 2).

C. 3), 1), 2).

D. 3), 2), 1)

E. 2), 3), 1)

Questions all relate to the following information:

YEAR	PROJECT A	PROJECT B
t=0	-$1,000,000	-$1,350,000
t=1	$350,000	$470,000
t=2	$400,000	$550,000
t=3	$320,000	$450,000
t=4	$40,000	$60,000
t=5	$550,000	$550,000

2) What is the NPV for Project A if the WACC is 8%?

A. $324,758

B. $397,541

C. $332,369

D. $7,611

3) What is the IRR for Project B?

A. 19.77%

B. 17.60%

C. 11.43%

D. 9.56%

E. Unable to calculate since the WACC is not given.

4) What is the crossover rate for the two projects?

A. 19.77%

B. 17.60%

C. 9.14%

D. 2.17%

5) You would choose Project A if the WACC is 11.5%.

True/False