A company is considering the purchase of a copier that costs $5,000. Assume a WACC of 10% and the following cash flow schedule: Year 1: $3,000. Year 2: $2,000. Year 3: $2,000.

22. What is the projects payback period? *

A. 1.5 years.

B. 2.0 years.

C. 2.5 years.

D. None of the above

23. What is the projects NPV? *

A. -$309.

B. +$883.

C. +$1,523.

D. -$883.

E. None of the above

24. If the project's IRR is 20%, would you accept the project: *

A. Yes

B. No

C. IRR cannot be used to choose a project

D. None of the above

25. Which of the following is least likely a problem associated with the internal rate of return (IRR) method of choosing investment projects? *

A. Using IRR to rank mutually exclusive projects assumes reinvestment of cash flows at the IRR.

B. For independent projects, the IRR and NPV can lead to different investment decisions.

C. If the project has an unconventional cash flow pattern, the result can be multiple IRRS.

D. None of the above.