Q1. Quark industries has a project with the following projected cash flows

Initial cost: $230, 000

Cash flow Yr 1 = $22, 000

Cash flow Yr 2 = $79, 000

Cash flow Yr 3 = $155, 000

Cash flow Yr 4 = $155, 000

(a) Using a discount rate of 12% for this project and the NPV model, determine whether the company should accept or reject this project

(b) Should the company accept or reject it using a discount of 15%

(c) Should the company accept or reject it using a discount of 21%.

Q. 2 NPV: Quark industries has three potential projects, all with an initial cost of $2, 200, 000. The capital budget for the year will allow quark to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project quark should accept

Cash flow Project M Project N Project O

Year 1 $600, 000 $700, 000 $1, 200, 000

Year 2 $600, 000 $700, 000 $1, 000, 000

Year 3 $600, 000 $700, 000 $800, 000

Year 4 $600, 000 $700, 000 $600, 000

Year 5 $600, 000 $700, 000 $400, 000

Which project should Quark accept?

(a) Project N

(b) Project M

(c) Project O

(d) None of the above.