Igloo Ltd presents you with the final calculations of the following independent projects. Assume in this case the projects have equal lives and the required rate of return is 10%

1. If Igloo Ltd has only $1,800 million dollars to invest, the project/s it should select is/are: (2 marks)

Select one:

a. Project b and c

b. Project c only

c. Project a and c

d. Project a only

e. Project a and b

2. Using the information supplied by Igloo Ltd above assume in this case the projects are mutually exclusive and that the project lengths are the following; Project a, 8 years. Project b, 3 years. Project c, 5 years. The required rate of return on investments is 10%. You would now advise Igloo Ltd to select (2 marks)

Select one:

a. Project b & c

b. Project b only

c. Project a only

d. Project c

e. Project a & b

a b $ $ 740.00 $ Projects Initial Outlay (millions) Net Present Value (millions) Internal Rate of Return 890.00 216.02 1,000.00 198.19 $ $ 89.52 $ 15.5% 12.8% 14.3%