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1. Project A has a cost of $7,000, its expected cash inflow at Year 2 is $9,000 and its cost of capital is 10%. What

1. Project A has a cost of $7,000, its expected cash inflow at Year 2 is $9,000 and its cost of capital is 10%. What is the projects NPV and IRR?

NPV

IRR

a.

$1,182

28.57%

b.

$438

28.57%

c.

$1,182

13.39%

d.

$438

13.39%

2. ABC company has the following financial information: Net operating profit after taxes $18,000 Capital expenditures 10,000 Depreciation expense 8,000 Change in working capital 4,000

What amount is the companys free cash flow?

a. $4,000 b. $8,000 c. $12,000 d. 16,000

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