1. Ali and Samir are considering a project that requires an initial investment of $10,000. The expected cash flows over the next three years are $2,000, $3,000, and $5,000. If the appropriate discount rate is 5.5%, Estimate the net present value?(10 marks)

2. . Suppose your firm is evaluating three potential new investments (all with 3-year project lives). You calculate for these projects: X, Y and Z, have the NPV and IRR figures given below:

   Project X: NPV = $8,000 IRR = 8%

   Project Y: NPV = $6,500 IRR = 15%

3. Evaluate three reasons why IRR is not the best technique for evaluating proposed new projects.(5 marks)

   Project Z: NPV = $500 IRR = 20%

   A) Justify which project(s) would be accepted if they were independent? (5 marks

   b) Justify which project(s) would be accepted if they were mutually exclusive? (5 marks)