Investments Quick and Slow cost $1,000 each, are mutually exclusive, and have the following cash flows. The firms cost of capital is 10 percent.

Cash Inflows

Q S

Year 1 $1,300 $386

2 386

3 386

4 386

According to the net present value method of capital budgeting, which investment(s) should the firm make? Use Appendix B and Appendix D to answer the question. Use a minus sign to enter negative values, if any. Round your answers to the nearest cent.

NPV (Investment Quick): $

NPV (Investment Slow): $

The firm should make investment(s)

-Select-

.

According to the internal rate of return method of capital budgeting, which investment(s) should the firm make? Use Appendix D to answer the question. Round your answers to the nearest whole number.

IRR (Investment Quick):

%

IRR (Investment Slow):

%

The firm should make investment(s)

-Select-

.

If Q is chosen, the $1,300 can be reinvested and earn 14 percent. Does this information alter your conclusions concerning investing in Q and S? To answer, assume that Ss cash flows can be reinvested at its internal rate of return. Use the rounded internal rate of return from part b. Use Appendix A and Appendix C to answer the question. Round your answers to the nearest cent.

Terminal value (Investment Quick): $

Terminal value (Investment Slow): $

The firm should make investment(s)

-Select-

.

Would your answer be different if Ss cash flows were reinvested at the cost of capital (10 percent)? Use Appendix C to answer the question. Round your answer to the nearest cent.

Terminal value (Investment Slow): $

The firm should make investment(s)

-Select-

.