QUESTION 1

Consider the cash flow of the two projects depicted in Table 3. If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will rank highest? --- Project A. Project B. Project A and Project B have the same ranking. Cannot calculate a payback period without a discount rate. "

Table 3

	Project A	Project B
Time 0	-9,000	-3,000
Time 1	10,000	3,000
Time 2	9,000	3,000
Time 3	12,000	3,000

		Project A.
		Project B.
		Project A and Project B have the same ranking.
		Cannot calculate a payback period without a discount rate.

QUESTION 2

1. "Consider the cash flow of the two projects depicted in Table 3. If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? --- Project A. Project B. Project A and Project B have the same ranking. Cannot calculate a payback period without a discount rate. "

   		Project A.
   		Project B.
   		Project A and Project B have the same ranking.
   		Cannot calculate a payback period without a discount rate.

QUESTION 3

1. " Consider the cash flow of the three projects depicted in Table 4. The cost of capital is 20%. The net present value (NPV) of project A is ________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

   Table 4

   Project	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
   	Cash Flow	Cash Flow	Cash Flow	Cash Flow	Cash Flow	Cash Flow
   A	-15000	12000	8000	5000	5000	5000
   B	-15000	7000	7000	7000	7000	7000
   C	-18000	17000	2000	2000	2000	2000