1. What is the most likely value of the present value of growth opportunity (PVGO) for a stock with current price of $50, expected earnings of $6 per share and a required return of 20%?

a) $10

b) $20

c) $30

d) $40

2. If a projects internal rate of return (IRR) is 13% and the project provides annual cash flows of $15,000 for four years, how much does the project cost?

a) $44,617

b) $52,200

c) $60,000

d) $72,747

3. The acceptance of an investment project implies that

a) Its profitability index (PI) is greater than zero

b) Its net present value (NPV) is greater than its IRR

c) Both (A) and (B)

d) Neither (A) nor (B)