1. A project is expected to create operating cash flows of $26,000 per year for three years. The initial cost of the fixed assets is $54,000. These assets will be worthless at the end of the project. An additional $4,500 of net working capital will be required throughout the life of the project. What is the projects net present value if the required rate of return is 14%?
   1. $1,862.43
   2. $4,899.80
   3. $399.80
   4. $9,399.80
   5. $1,678.57

1. What is true about a firm that has Return on Assets = Return on Equity?
   1. It has a financial leverage ratio of 1.0.
   2. It may have short-term, but not long-term debt.
   3. It is using its assets as efficiently as possible.
   4. It has no net working capital.
   5. It has a debt-equity ratio of 1.0.