Project A Project B Project C Project D Project E Today (20,000) (30,000) (7,500) (4,000) (6,000) Year 1 10,000 6,000 2,000 2,000 750 Year 2 6,000 8,000 3,000 2,500 1,500 Year 3 4,000 10,000 4,000 3,000 2,250 Year 4 2,000 8,000 2,500 3,000

Year 5 1,000 6,000 2,000 3,750 Year 6 500 4,000 (8,000) 4,000

What is the payback period of project E? a) 3 year b) 3.5 years c) 4.25 years d) 5 years 7. What is the crossover rate between projects A and B? a) 8.4% b) 11.2% c) 13.6% d) There are multiple crossover rates 8. What is the NPV of project D if the cost of capital is 6%? a) -34 b) 272 c) 466 d) 652

9. If A and C are repeatable, mutually exclusive projects, then which one is better if the WACC is 8%? a) Project A b) Project C