1. IRR, investment life, and cash inflowsOak Enterprises accepts projects earning more than the firm's 11% cost of capital. Oak is currently considering a 12-year project that provides annual cash inflows of $45,000 and requires an initial investment of $368,800.

a.Determine the IRR of this project. Is it acceptable?

b.Assuming that the cash inflows continue to be $45,000 per year, how many additional years would the flows have to continue to make the project acceptable (that is, to make it have an IRR of 11%)?

c.With the given life, an initial investment of $368,800, and cost of capital of 11%, what is the minimum annual cash inflow the investment would have to provide in order for this project to make sense for Oak's shareholders?

2.NPVCalculate the net present value (NPV) for a 15-year project with an initial investment of $5,000 and a cash inflow of $2,000 per year. The cost of capital is 18%. Comment on the acceptability of the project.