1. Which of the statements below is false?

a. To account for the time value of money with the payback period model, you need to restate the future cash flow in current dollars.

b. The discounted payback period method is the time it takes to recover the initial investment in future dollars.

c. When we discount a future cash flow with our standard time value of money concepts, we inherently assume that the company received the entire cash flow at the end of the year.

d. The discounted payback period method does not correct for the cash flow after the recovery of the initial outflow.

2. A proposed new investment has projected sales of $700,000. Variable costs are 60 percent of sales, and fixed costs are $175,000; depreciation is $75,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?