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17. The cost of capital is a. the opportunity cost of using funds to invest in new projects. b. the rate of return the firm must earn on its investments in order to satisfy the required rate of return of the firm's investors. le rate for new capital investments which have typical or average risk. d. all of the above. 18. D expected to generate positive cash flows over the next four y $325,000 in year two, $150,000 in year three, and $180,000 in year four. DYl's required rate of retum is 8%. What is the payback period of this project? A) 4.00 years B) 3.09 years C) 2.91 years D) 2.50 years YI Construction Co. is considering a new inventory system that will cost $750,000. The system is ears in the amounts of $350,000 in year one, 19. Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in year 5. What is the investment's discounted payback period if the required rate of return is 10%? A) 3.33 years B) 3.16 years C) 2.67 years D) 2.33 years 20. DYI Construction Co. is considering a new inventory system that will cost $750,000. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $325,000 in year two, $150,000 in year three, and $180,000 in year four. DYI's required rate of retum is 8%, what is the net present value of this project? A) $104,089 B) S100,328 C) $96,320 D) $87,417 2 Lithium, Inc. is considering a project. Project costs $120,000 and is expected to generate $64,000 in year one, 567,000 in year two, $56,000 in year three, and $45,000 in year four. Lithium, Ine's reinvestment rate is 10%. The modified internal rate of return for Project is A) 17.84% B) 18.52%. C) 19.75%. D) 22.80%