Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a porion of its planning and financial data when its server and its backup server crashed. The company's CFO remembers that the internal rate of return (IRR) of project Gamma is 13.8%, but he can't recall how much Green Caterpillar originally invested in the project nor the project's net present value (NPV). However, he found a note that contained the annual net cash flows expected to be generated by Project Gamma. They are:

Year	Cash Flow
Year 1	$2,200,000
Year 2	$4,125,000
Year 3	$4,125,000
Year 4	$4,125,000

The CFO haas asked you to compute project Gamma's inital investment using the information currently available to you. He as offered the following suggestions and observations:

-A Project's IRR represents the return the project would generate when its NPV is zero or the discounted value of its cashs inflows equals the discounted value of its cash outflows-when the cash flows are discounted using the project's IRR.

-The level of risk exhibited by project gamma is the same as that exhibited by the company's average project, which means that project gammas net cash flows can be discounted using green caterpillars 7% WACC.

Given the datea and hints, Project Gamms's inital invest is _________, and its NPV is _____________? ( rounded to the nearest whole dollar)

1.

a. $10,518,248

b. $10,376,945

c. $12,068,509

d. $10,816,505

2.

a. $1,975,860

b. $1,436,989

c. $1,796,236

d. $1,526,801

A project's IRR will ________ if the prjoect's cash inflows decrease, and everything else is unaffected.

a. increase

b. stay the same

c. decrease