2. The capital budgeting director of Sparrow Corporation is evaluating a project that costs $270,000, is expected to last for 8 years, and produces after-tax cash flows equal to $50,000 per year. If the firm's required rate of return is 12 percent and its tax rate is 40 percent, what is the project's internal rate of return (IRR)?

a. 0.0694

b. 0.0967

c. 0.1165

d. 0.0720

3. Seattle Inc. identified an investment opportunity that requires an initial cash outflow of $155,000. Seattle's required rate of return is 10 percent. The investment will yield cash flows of $30,000 per year in Years 1 through 2, $35,000 per year in Years 3 through 4, and $40,000 in Year 5. Assume the cash flows occur evenly during the year. What is the traditional payback period for this investment?

a. 4.625

b. 1.097

c. 2.625

d. 5.000

4. HHH Company's current ratio is 1.5. Considered alone, which of the following actions would reduce the company's current ratio?

a. Use cash to reduce accounts payable.

b. Use cash to reduce accruals.

c. Borrow using short-term notes payable and use the proceeds to reduce long-term debt.

d. Use cash to reduce short-term notes payable.