1A.

A company estimates that its required rate of return is 12 percent. Which of the following projects should the company accept, if all these projects are independent?

A. Project A requires an initial investment of $2,000,000 and generates a NPV of $200.

B. Project B has an IRR of 11.5 percent.

C. Project C requires an initial investment of $1,000,000 and generates an IRR of 11 percent.

D. None of the above.

1B.

Wonder Shampoo, Inc. is considering launching a new shampoo product in the coming year. The new shampoo project requires $8.5 million capital investments at time zero, which will be depreciated based on the 3-year MACRS shown below. This project is expected to generate new sales of $6 million each year with $3 million cost a year. What is the operating cash flow for year 1 if the firm's tax rate is 40%?

3-Year MACRS
Year	Percentage
1	33%
2	45%
3	15%
4	7%
total	100%

Question 30 options:

1)	$2.25 million.

2)	$2.922 million.

3)	$4.032 million.

4)	$2.045 million.