1. Which of the following statements are true about using the internal rate of return (IRR)?

a. A project can have more than one IRR.

b. IRR is defined as the discount rate at which the future value of the project's cash flows is one million.

c. You must know the discount rate to compute the IRR.

d. It measures the amount of value the project adds to the firm.

2. Compute the internal rate of return for the following cash flows: Period 0: -1750 Period 1: 1200 Period 2: 600 Period 3: 350 Enter your answer in percent and round to the nearest 0.01.

3. Compute the modified internal rate of return for the following cash flows using a discount rate of 9%: Period 0: -1928 Period 1: 708 Period 2: 644 Period 3: 771 Enter your answer in percent and round to the nearest 0.01%.

4. Find the crossover rate of projects A and B Year Project A Project B 0 -1000 -500 1 950 550 2 500 350 Enter your answer in percent and round to the nearest 0.01%.

5. Machinery costs $1 million today and $100,000 per year to operate. It lasts for 5 years. What is the equivalent annual annuity if the discount rate is 3%? Enter your answer in dollars and round to the cent. Remember that costs are negative cash flows; so, include the negative sign.

6. Find the profitability index of a project with the following cash flows using a discount rate of 5%: Period 0: -1000 Period 1: 746 Period 2: 342 Period 3: 220 Enter your answer in a decimal and round to the hundredths place.

7. Calculate the discounted payback period of a project with a discount rate of 8% and these cash flows: Period 0: -1000 Period 1: 749 Period 2: 90 Period 3: 1258

8. Calculate the payback period of a project with these cash flows: Period 0: -1000 Period 1: 765 Period 2: 387 Period 3: 250

9. Calculate the NPV of a project with a discount rate of 3% and these cash flows: Period 0: -1000 Period 1: 739 Period 2: 323 Period 3: 298