3. (2 points) The appropriate discount rate on a new project is I. the minimum expected rate of return the investment must carn to be attractive to investors. the rate of return investment of similar risk earn in the market. the internal rate of return on the project. IT. III. a) b) c) I only II only II and III only I and II only e) I, II, and III 4. (2 points) You are going to choose between two mutually exclusive investments. Both investments cost $80,000 but investment A pays $35,000 per year for 4 years and investment B pays $30,000 per year for 5 years. Assume these cash inflows occur at the end of each year. If your required rate of return is 13%, you should choose. a) A because it pays back sooner. b) A because its IRR exceeds 13%. c) A because it has a higher IRR. d) B because its RRR exceeds 13%. e) B because it has a higher NPV. 5. (2 points) A company is considering 5 mutually exclusive projects. In considering these projects, the firm knows a) these cannot be financing projects. b) only one project will be accepted, the other four will be rejected. the acceptance of one project is not affected by either the acceptance or rejection of another. d) the TRR method should always be used. It may accept as many of the five projects it wishes as long as they have positive NPV's. 6. (2 points) A company's financial analyst was preparing her report on a project her company was exploring when a computer crash destroyed some of her data. The following information was all she could retrieve. NPV of the project = $74,767.67 Real discount rate = 12% Cash flows of the project: Year 0 1 3 Real cash flows -$600,000 SO $500,000 Nominal cash flows ? SO $441,000 Determine the missing real cash flow for year 2. 2