1. Michigan Motors is considering the purchase of a land and the construction of a new plant. The land, which would be bought immediately (at t = 0), has a cost of $300,000 and the building, which would be erected at the end of the first year (t = 1), would cost $700,000. It is estimated that the firm's after-tax cash flow will be increased by $175,000 starting at the end of the second year, and that this incremental flow would increase at a 10 percent rate annually over the next 15 years. What is the approximate payback period?

1. Davis Machineries is faced with two independent investment opportunities. The company has an investment policy which requires acceptable projects to recover all costs within 3 years. The company uses the discounted payback method to assess potential projects and utilizes a discount rate of 10 percent. The cash flows for the two projects are:

1. Year	Project A	Project B
   0	-$100,000	-$80,000
   1	40,000	50,000
   2	40,000	20,000
   3	40,000	30,000
   4	30,000	0

   Which investment project should the company invest in?

2. A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below:

3. Year	0	1	2	3	4
   CF (S)	-1,100	900	350	50	10
   CF (L)	-1,100	0	350	50	850

   The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. What is the regular IRR (not MIRR) of the better project? (Hint: To identify which project is better, you need to apply a technique that you have seen in the past).

4. Norgin Salmon Inc., a large salmon canning firm operating out of Norway, has a new automated production line project it is considering. The project has a cost of $350,000 and is expected to provide after-tax annual cash flows of $93,306 for eight years. The firm's management is uncomfortable with the IRR reinvestment assumption and prefers the modified IRR approach. You have calculated a cost of capital for the firm of 12 percent. What is the project's MIRR?