1, XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $48,400.00. It would be depreciated straight-line to $0 over 2 years. In 2 years, the system would be sold for an after-tax cash flow of $13,000.00. Without the system, costs are expected to be $100,000.00 in 1 year and $100,000.00 in 2 years. With the system, costs are expected to be $78,400.00 in 1 year and $68,700.00 in 2 years. If the tax rate is 45.60% and the cost of capital is 8.70%, what is the net present value of the new interception system project?

$11713.13 (plus or minus $50)

$7314.35 (plus or minus $50)

$10950.82 (plus or minus $50)

$8660.09 (plus or minus $50)

None of the above is within $50 of the correct answer

2, The following table presents information on a potential project currently being evaluated by XYZ. Which assertion about statement 1 and statement 2 is true?

Expected cash flows (number of years from today)					Cost of capital
0	1	2	3	4
-$72,000.00	$38,000.00	$15,000.00	$32,000.00	$7,000.00	10.78%

Statement 1: XYZ would accept the project based on the project's net present value and the NPV rule.

Statement 2: XYZ would accept the project based on the project's payback period and the payback rule if the payback threshold is 2.44 years

		Statement 1 is false and statement 2 is true
		Statement 1 is false and statement 2 is false
		Statement 1 is true and statement 2 is false
		Statement 1 is true and statement 2 is true