1.the interest rate that makes NPV equal to zero when it is used as the discount rate * NPV * PI * IRR (Internal Rate of Return) * Pay back rule 2.When NPV is greater than 0, the PI will be (use the profitability and NPV relations) * less than 1 * greater than zero * greater than one * less than zero 3.A firm wants to start a project. A team of financial analysts estimated the following cash flows Suppose that the discount rate (interest rate) is 12%. The NPV is year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 * $-11,627.12 * $15,416.59 * $115,416.59 * $10,206.14 A firm wants to start a project. A team of financial analysts estimated the following cash flows year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 Suppose that the discount rate (interest rate) is 12%. According to the calculation of NPV we should * undertake the project * not undertake the project * we can not decide because we do not have enough information * undertake the project in the short run and do not under take it in the long A firm wants to start a project. A team of financial analysts estimated the following cash flows Suppose that the discount rate (interest rate) is 12%. The NPV is year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 The pay back period is * 1.04 years * 2.04 years * 3.04 years. * We cannot find it 5.A firm wants to start a project. A team of financial analysts estimated the following cash flows year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 Based on your calcification of the pay back period and if the cut off point is 2 years, the project should * Can not decide because we do not have enough information * not undertake the project in the short run but undertake the project in the long run * Undertake the project * Not undertake the project 6.A firm wants to start a project. A team of financial analysts estimated the following year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 Suppose that the discount rate (interest rate) is 12%. Based on your calculation of PI, the project should * Be undertaken * Be undertaken in the long run not in the short run * Not be undertaken * Be undertaken in the short run not in the long run A firm wants to start a project. A team of financial analysts estimated the following year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 Suppose that the discount rate (interest rate) is 12%. The profitability index (PI) is - 1.15 -2.15 -0.87 -15,416.59