22. GD Industries is considering a project which has the following cash flows: Year Cash Flow 0 -$X 1 $2,000 2 $3,000 3 $3,000 4 $1,500 The project has a payback of 2.5 years. The firms cost of capital is 12 percent. What is the projects net present value NPV? A. $765.91 B. $2,761.32 C. $3,765.91 D. $577.68 E. $1,049.80

23. Gamma Analytics is considering two mutually exclusive projects, A and B. The projects have the following cash flows: Year Cash Flow A Cash Flow B 0 -$200 -$300 1 20 90 2 30 70 3 40 60 4 50 50 5 60 40 At what cost of capital would the two projects have the same net present value (NPV)? A. -47.96% B. 10.32% 7 C. 12.69% D. 9.32% E. 8.45%

24. Gamma Inc. began operating in 2015. The company lost money the first year but has been profitable ever since. The companys taxable income (EBT) for its first four years is listed below. Each year the companys corporate tax rate has been 40 percent. Year Taxable Income 2015 $60,000 2016 -$80,000 2017 $30,000 2018 $40,000 Assume that the company has taken full advantage of the Tax Codes carry-back, carryforward provisions and that the current provisions were applicable in 2015 through 2018. How much did the company pay in taxes in 2018? A. $8,000 B. $4,000 C. $16,000 D. $0 E. $12,000

25. How many years will it take $1 million to grow to $3 million with an annual interest rate of 7 percent? A. 10.29 years B. 14.52 years C. 16.24 years D. 33.33 years E. 8.93 years

26. How much would be in your savings account in 7 years after depositing $100 today if the bank pays 5% interest per year? A. $135.00 B. $140.71 C. $735.00 D. $814.20 E. $155.60

27. If a preferred stock from Cytec Industries, Inc. (CYT) pays $2.00 in annual dividends, and the required return on the preferred stock is 6.5 percent, what's the value of the stock today? A. $0.13 B. $0.31 C. $13.00 8 D. $30.77 E. None of the above

28. If the cost of capital is 10%, what is the Profitability Index (PI) of this project and should be accepted or rejected? Year 0 1 2 3 4 5 6 Cash Flow -$1000 200 400 600 600 200 600 A. -.84, reject B. .84, reject C. .84, accept D. -.84, accept E. 2.67, accept

29. If the cost of capital is 10%, what is the discounted payback of this project? Year 0 1 2 3 4 5 6 Cash Flow -$1000 200 400 600 600 200 600 A. 2.91 years B. 2.94 years C. 3.06 years D. 3.09 years E. 2.67 years

30. If the cost of capital is 10%, what is the IRR of this project and should be accepted or rejected? Year 0 1 2 3 4 5 6 Cash Flow -$1000 200 400 600 600 200 600 A. 6.45%, reject B. 32.12%, accept C. 32.69%, accept D. 2095.24%, accept E. 21.72%, accept

31. If the cost of capital is 10%, what is the MIRR of this project and should be accepted or rejected? 9 Year 0 1 2 3 4 5 6 Cash Flow -$1000 200 400 600 600 200 600 A. 6.76%, reject B. 20.87%, accept C. 21.72%, accept D. 32.12%, accept E. None of the above

32. If the cost of capital is less than then crossover rate and the projects are mutually exclusive a conflict may occur. A. True B. False