a) USE THE FOLLOWING PROJECT CASH FLOWS FOR QUESTIONS 14-17:

Project A Project B Project C Project D Project E

Today (20,000) (30,000) (8,000) (4,000) (6,000)

Year 1 10,000 2,000 1,000 1,000 750

Year 2 5,000 4,000 2,000 2,000 1,500

Year 3 2,500 6,000 3,000 3,000 2,250

Year 4 2,000 8,000 4,000 2,000 3,000

Year 5 1,000 10,000 5,000 1,000 3,750

Year 6 500 12,000 (4,000)

14. What is the payback period of project A? a) 3 year b) 3.75 years c) 4.5 years d) 5 years

15. What is the crossover rate between projects B and C? a) 0% b) 2.4% c) 4.5% d)8.25%

16. What is the Net Present Value of project D if the cost of capital is 12%? a) -$1,000 b) $435 c) $678 d) $1000

17. What is the IRR of project B if the cost of capital is 6%? a) 0% b) 2.4% c) 4.5% d)8.25%