1. What are the benefits of using the NPV rule as an investment decision rule? Select all statements that are true.

a. Accounts for the time value of money

b. Accounts for risk

c. Dividends and the value of the stock only if the investor sells the stock

d. Measure of value added to the firm

2. Calculate the NPV of a project with a discount rate of 10% and these cash flows: Period 0: -1000 Period 1: 744 Period 2: 319 Period 3: 239 Round to the nearest cent.

3. Calculate the payback period of a project with these cash flows: Period 0: -1000 Period 1: 718 Period 2: 389 Period 3: 250 Answer in years and round to the nearest hundredth.

4. Calculate the discounted payback period of a project with a discount rate of 6% and these cash flows: Period 0: -1000 Period 1: 742 Period 2: 131 Period 3: 1190 Answer in years round to the nearest hundredth.