Instructions

Question $1$:

A $$2\mathrm{.}3$ Million initial investment today will result in the following year$-$end cash inflows: Year $1,$ $$1\mathrm{.}4$M$,$ Year $2,$ $$1\mathrm{.}6$M$,$ Year $3,$ $$1\mathrm{.}9$M$,$ Year $4,$ $$0\mathrm{.}8$M$.$ If we have an $9\%$ cost of capital, what is the NPV of the project?

Question $2$:

A three$-$year investment $($Equipment$)$ requires you to invest $$1,000$ initially. It is expected to provide three year$-$end cash inflows of $$200$ and you can sell the equipment for $$700$ at the end of three years. What is the IRR? If your cost of capital is $15\%,$ would you go ahead with the project as a finance manager?