1. Johnson Inc. is considering a new investment that will cost $400,000. The investment is expected to generate the following annual cash flows (in order) over the next three years: $150,000, $75,000, $220,000. Find the investment's internal rate of return. Round your answer to four decimals and enter your response in decimal format (ex: .XXXX).

How would this be solved if using a BA II Plus Financial Calculator.

2. A project requires an initial outlay of $600,000 and has a profitability index of 1.2. The project is expected to generate equal annual cash flows over the next seven years. The required return for this project is 10%. What is the project's net present value?

		240,000
		120,000
		100,000
		-100,000
		Cannot be determined

3. GM is considering two mutually exclusive projects, A and B. Project A costs $175,000 and is expected to generate $40,000 in year one, $50,000 in year two, and $60,000 per year in years 3 and 4. Project B costs $140,000 and is expected to generate $80,000 in year one, $0 in years two and three, and $90,000 in year four. GM's required rate of return for these projects is 20%. GM decides to use NPV to evaluate these projects. Which project or projects will they choose?

		Project A
		Project B
		Projects A&B
		GM would reject both projects

4. Northwest Industries is considering a project with the following cash flows:

Northwest's required rate of return is 12%. Would Northwest take this project if it uses IRR as a decision criteria? Assume the project is independent.

		Yes
		No
		Northwest would be indifferent between accepting and rejecting the project.
		Cannot be determined.