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10 Use the following information to answer next three questions: IO PI IRR LIFE 15 years 6 years Project 1 $300,000 1.12 14.38% Project 2

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10 Use the following information to answer next three questions: IO PI IRR LIFE 15 years 6 years Project 1 $300,000 1.12 14.38% Project 2 $150,000 1.08 13.32% Project 3 $100,000 1.20 16.46% Assume that the cost of capital is 12%. 3 years If the firm has unlimited capital and each project is independent, which project(s) should be accepted? Project 1 Projects 1 and 2 O Projects 1 and 3 Projects 2 and 3 Projects 1, 2 and 3

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