Net Present Value Problems 1. An investment opportunity costing 100,000 is expected to yield a net cash flow of 25,000 annually over the next seven years. a. Calculate the NPV of the investment at a discount rate of 10%? b. Would you accept or reject this project and explain why? c. Calculate the Profitability index on this investment opportunity? d. If you had to choose between 2 projects, this one and another one that had a profitability index of 1.85, which would you choose and why? 2. If you had a project that cost 40,000 and is expected to yield the follow cash flow over the next three years Year 1: 10,000 Year 2: 20,000 Year 3: 5,000 Year 3: -3,000 End of Project payment has to be paid The cost of capital is 12% a. Find the NPV and profitability index on this project? b. Would you accept or reject this project and why?