1. Assume that you are thinking over an investment into a six-year project in the value of 2 million CZK. It is expected that the investment will generate following cash-flows: years 1 - 3 = 600,000 CZK, years 4 - 6 = 400,000 CZK. WACC equals to 10%. Calculate the net present value of the future cash-flows, payback period and discounted payback period. We also assume that cash-flows in given years are balanced.

1. Consider the following cash flows from two mutually exclusive investments and decide which one to choose if your required rate of return were 10%? Cross selection point is 2,55 %. Which project would you choose if you required rate of return was 2 %? What is the NPV of both projects? IRR Project A = 20 %, IRR Project B = 38 %.

Year	0	1	2	3	4
Project A	150 EUR	20	10	25	255
Project B	150 EUR	100	60	70	70