10.What is the net present value of a project that requires an initial investment of $76,000 and produces net cash flows of $22,000 per year for 7 years? Assume the discount rate is 15 percent.

a. $91,520

b. $15,520

c. $78,000

d. $167,474

11.Frazier Fudge, Inc. is considering 2 mutually exclusive projects with the following cash flows. Which project should be accepted? Assume a cost of capital of 10%

Years Project X Project Y

0 ($350) ($350)

1 $130 $200

2 $150 $120

3 $180 $120

a. Project X because NPV is $27.4

b. Project Y because NPV is $31

c. Project X because IRR is 13.7%

d. Project Y because IRR is 12.2%

12.The following projects are all characterized by a single initial cash outflow (the initial investment) followed by a series of cash inflows. Rank them based on profitability index.

Investment NPV

Project A $160,000 $30,000

Project B $120,000 $15,000

Project C $110,000 $25,000

Project D $200.000 $40,000

a. A, C, B, D

b. C, D, A, B

c. D, A, C, B

d. B, D, C, A