Q1.

Your firm is half-way through a six year project with the following forecast and actual cash flows:

	Forecast CF	Actual CF
CF1	$3.40 million	$3.20 million
CF2	$2.90 million	$2.75 million
CF3	$3.10 million	$3.00 million
CF4	$2.95 million
CF5	$3.25 million
CF6	$3.00 million

The original forecasted project investment was $10.0 million and the actual investment was $12.0 million. The original project hurdle rate was 10.50% and the current hurdle rate is 11.50%. What is the revised net present value of this project?

Select one:

A. $.3456 million

B. $.5491 million

C. $.8524 million

D. $.9954

Q2.

Your firm is half-way through a six year project with the following forecast and actual cash flows:

	Forecast CF	Actual CF
CF1	$3.40 million	$3.20 million
CF2	$2.90 million	$2.75 million
CF3	$3.10 million	$3.00 million
CF4	$2.95 million
CF5	$3.25 million
CF6	$3.00 million

The original forecasted project investment was $10.0 million and the actual investment was $12.0 million. The original project hurdle rate was 10.50% and the current hurdle rate is 11.50%. Using the forecast error approach, this project should be:

Select one:

A. Sold for any amount less than $7.07 million

B. Abandoned if the amount offered is less than $7.07 million

C. Sold if the amount offered is greater than $7.07 million

D. Scrapped immediately