6) A firm is considering an investment opportunity. The firms cost of capital for this project is 12%. The project will require an initial investment of $6 million and it will generate cash flows $750,000 per year forever. Q1-Q2.

Q1) What is the NPV of this project?

a)300000

b)100000

c)250000

d)400000

Q2) Use the same information as in Q6. What is the IRR of the project?

a)10%

b)11.5%

c) 13%

d) 12.5%