1.)

Initial Outlay $50 million

Year 1 $10 million

Year 2 $20 million

Year 3 $20 million

Year 4 $10 million

Year 5 $5 million

The required rate of return is 15%. What is the IRR of the project? Round to the near hundredth percent. Do not include any unit such as $, %, etc. (i.e. if your answer were -1.23%, type in -1.23 as your answer without %) If there are multiple answers, then type NA.

2.)

Initial Outlay $50 million

Year 1 $10 million

Year 2 $20 million

Year 3 $20 million

Year 4 $10 million

Year 5 $5 million

The required rate of return is 15%. What is the EAA of the project? Round to the near hundredth million. Do not include any unit such as $, %, etc. (i.e. if your answer were -$1.23 million, type in -1.23 as your answer without $ and million) If there are multiple answers, then type NA.

3.)

You are trying to determine which of two mutually exclusive projects to undertake. Project Adam has an initial outlay of $10,000, an NPV of $4,392.15, an IRR of 11.33%, and an EAA of $1,158.64. Project Eve has an initial outlay of $15,000, an NPV of $5,833.73, an IRR of 9.88%, and an EAA of $1,093.50. The cost of capital for both projects is 10%, and the projects have different lives. If the projects are repeatable, then:

a.) You should do both projects because they have positive NPVs.

b.) You should do Project Adam because it has a higher EAA.

c.) You should do Project Eve because it has a higher NPV.

d.) You should do Project Adam because it has a higher IRR.

e.) You should do neither projects since neither of them adds value to you.

4.)

Use the following information to answer next three questions:

IO PI IRR LIFE

Project 1 $300,000 1.12 14.38% 15 years

Project 2 $150,000 1.08 13.32% 6 years

Project 3 $100,000 1.20 16.46% 3 years

Assume that the cost of capital is 12%.

If the firm has a maximum capital expenditures budget of $450,000, and if the projects are independent and mutually exclusive but not repeatable, which project(s) should be accepted?

a.) Projects 1 and 2

b.) Projects 1 and 3

c.) Projects 2 and 3

d.) Projects 1, 2, and 3

e.) Project 1