7. Project Black Swan requires an initial investment of $115,000. It has positive cash flows of $140,000 for each of the next two years. Because of major demolition and environmental clean-up costs, cash flow for the third and final year of the project is $(170,000). The company accepts all projects with a payback period of 2 years or less. A) The payback rule would reject this project because of its risks are too high. B) The payback rule would reject this project because all negative cash flows are added together. C) If strictly applied, the payback rule would reject this project. D) If strictly applied, the payback rule would accept this project. 8. Project H requires an initial investment of $100,000 and produces annual cash flows of $50,000, $40,000, and $30,000. Project T requires an initial investment of $100,000 and the produces annual cash flows of $30,000, $40,000, and $50,000. The projects are mutually exclusive. The company accepts projects with payback periods of 3 years or less. A) Project H will be accepted. B) Project T will be accepted. C) H and T will both be accepted. D) Neither projected will be accepted. 9. Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. A) Both projects should be accepted because they have positive NPV's. B) Neither project should be accepted because they might compete with one another. C) Only project Delta should be accepted. Alpha's NPV is too low for the investment. D) The company should look at other investment criteria, not just NPV. 10. ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is 12%. (Round your answer to the nearest $1.) A) $1,056 B) $4,568 C) $7,621 D) $6,577