1A) What is the discounted payback period on Versace's proposed investment in a new line of fashion clothes? The expected cash flows appear below. Note that year 0 and year 1 cash flows are negative. (Answer in years; round to 2 decimals) Year 0 cash flow = -95,000 Year 1 cash flow = -18,000 Year 2 cash flow = 50,000 Year 3 cash flow = 49,000 Year 4 cash flow = 54,000 Year 5 cash flow = 45,000 Year 6 cash flow = 46,000 Required rate of return = 14.00%

1B) Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The board of directors wants to know the expected impact on shareholder wealth. Knowing that the estimated impact on shareholder wealth equates to net present value (NPV), you use your handy calculator to compute the value. What is the project's NPV? Assume that the cash flows occur at the end of each year. The discount rate (i.e., required rate of return, hurdle rate) is 20.4%. (Round to nearest penny)

Year 0 cash flow	-98,000
Year 1 cash flow	35,000
Year 2 cash flow	36,000
Year 3 cash flow	44,000
Year 4 cash flow	49,000
Year 5 cash flow	29,000

1C) US Robotics is evaluating a new product line. The CFO asks for an estimate of number of years to recover the initial investment, ignoring the time value of money. You realize that this is the payback period. The estimated cash flows from the new product line appear below. (Answer in years, round to 2 places) Year 0 cash flow = -82,000 Year 1 cash flow = -41,000 Year 2 cash flow = 24,000 Year 3 cash flow = 40,000 Year 4 cash flow = 22,000 Year 5 cash flow = 26,000 Year 6 cash flow = 36,000 Year 7 cash flow = 39,000

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