1.If the profitability index (or BCR) for this set of cash flows is 0.92, is this a good investment from the DCF modeling perspective? Choose Yes, No or Not Sure, then provide a reason for your answer.

Year	Cash Flow
0	$	-16,700
1		9,700
2		7,800
3		4,300

A)Yes

B)We can't answer this question without knowing rocc.

C)The BCR rule is to accept projects with BCR values less than 1.

D)The BCR is a small fraction of the project's positive cash flows.

E)The BCR rule is to reject projects with BCR values less than 1.

F)No

G)Not sure

2.A firm evaluates all of its projects by applying the IRR rule. A project under consideration has an IRR of 20%, and an rocc of 21%. The risk-free rate rrf is 12%. Should the firm go ahead with this project? (Assume its OK to use the IRR rule). Choose yes, no or not sure, then also choose one answer providing your reasoning.

A)We can't compare the NPV to the IRR.

B)The IRR rule says to reject only projects with IRR > rocc.

C)Not sure

D)The IRR rule says to accept projects with IRR > rrf.

E)We can't compare the BCR to the IRR.

F)The IRR rule says to reject projects with IRR > rrf.

G)No

H)The IRR rule says to accept only projects with IRR > rocc.

I)Yes

3.

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:

Year	Cash Flow
0	$	-34,000
1		15,000
2		17,000
3		13,000

If the NPV of the above project is as stated above, how much value does it add to the firm, compared to investing in an Opportunity Cost Investment project?

A)This cannot be determined without knowing the opportunity cost of capital

B)$1.27

C)$2.54