A firm has the following investment alternatives:

	Cash Inflows
Year		A			B			C
1		$	1,122		$	3,300
2			1,122
3			1,122					$	3,885

Each investment costs $3,000; investments B and C are mutually exclusive, and the firms cost of capital is 7 percent. Use Appendix A, Appendix B and Appendix D to answer the questions. Assume that the investments are not mutually exclusive and there are no budget restrictions.

1. What is the net present value of each investment? Use a minus sign to enter a negative values, if any. Round your answers to the nearest dollar.

   A: $

   B: $

   C: $

2. What is the internal rate of return on each investment? Round your answers to the nearest whole number.

   A: %

   B: %

   C: %

3. If the firm could reinvest the $3,300 earned in year 1 from investment B at 8 percent, which investment(s) should the firm make? Round your answer to the nearest dollar.

   Terminal value of investment B: $

   Would the answer be different if the rate were 10 percent? Round your answer to the nearest dollar.

   Terminal value of investment B: $ .

4. If the firms cost of capital had been 8 percent, what would be investment As internal rate of return? Round your answer to the nearest whole number.

   %