13. As the director of capital budgeting for ABC Corporation, you are evaluating two mutually exclusive projects with the following net cash flows: Year Project A Project B 0 -$100,000 -$100,000 1 50,000 10,000 2 40,000 30,000 3 30,000 40,000 4 10,000 60,000 If ABC's cost of capital is 15 percent, which project would you choose? A. Neither project. 4 B. Project A, since it has the higher IRR. C. Project B, since it has the higher IRR. D. Project A, since it has the higher NPV. E. Project B, since it has the higher NPV.

14. As the director of capital budgeting for Boeing Company, you are evaluating two mutually exclusive projects with the following net cash flows: Year Cash Flow X Cash Flow Y 0 -$100 -$100 1 50 10 2 40 30 3 30 40 4 10 60 What is the crossover rate, if any A. 7.17% B. -33.04% C. 33.04% D. Cannot be determined E. None of the above

16. Circuit City Stores (CC) recently paid a $.16 dividend. The dividend is expected to grow at a 23 percent rate. At the current stock price of $7.96, what is the return shareholders are expecting? Set your decimal places to 4 places and assume the stock is in equilibrium. A. 2.01% B. 23.00% C. 24.02% D. 25.47% E. None of the above 5

17. Compute the IRR for Project X and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10%. Time: 0 1 2 3 4 5 Cash Flow: -1300 400 400 400 400 400 A. 16.32%; accept B. 16.32%; reject C. 13.44%; accept D. 13.26%; reject E. None of the above