. 6 Use the following for Questions 1 - 5: You are considering two mutually exclusive projects. A and B. Project A costs $100,000 and generates cash flows of $15,000 for 10 years. Project B costs $75,000 and generates cash flows of $2,000 for seven years and then generates a cash flow of $115,000 in year 8. Report rates in percentage form to two decimal places i.e. 10.03% not 10% Question 1 (3 points) Calculate what discount rate would make you indifferent between choosing one project or another. i.e. what discount rate produces the same NPV for both projects? A Question 2 (1 point) Which project would you ACCEPT if your discount rate was 1%? 3 O A) Project A 6 B) Project B C) Both Project A and B OD) Neither Project A or B QUELIUI Jl Pull) Which project would you ACCEPT if your discount rate was 5%? 2 3 A) Project A S 6 B) Project B C) Both Project A and B D) Neither Project A or B Question 4 (1 point) Which project would you ACCEPT if your discount rate was 10%? A) Project A B) Project B age 1 What is the highest discount rate in which you can still produce a non-negative NPV for at least one project? 1 2 3 A/ 4 5 6 7 Question 6 (1 point) An INDEPENDENT project costs $500,000 and will return cash flows of $200,000 for 4 years If you knew the firm's cost of capital rate (discount rate), which of the following measures would you use to determine whether to clearly ACCEPT or REJECT the project? A) NPV B) IRR OCPI 4 5 6 1 7 Question 7 (1 point) An INDEPENDENT project costs $1,000,000 and will return cash flows of $550,000 for 3 years and $50,000 for the 3 years after that. In the seventh year, you will need to upgrade the equipment at a net cost of $850.000 (