Question 1: Suppose a company had an initial investment of $50,000. The cash flow for the next five years are $14,000, $18,000, $17,000, $14,000, and $13,000, respectively. The interest rate is 8%.

- What is the discounted payback period?___ (Enter only whole numbers) Question 2: LakeCraft is considering investing in a cruise ship with an expected life of 10 years that costs $65 million and will produce net cash flows of $11 million per year. LakeCraft's cost of capital is 10%. Enter your answers rounded to 2 DECIMAL PLACES.

- What is the payback period?___

- What is the net present value (NPV) of the project? ___ million (Enter your answer in millions of dollars) Question 3: Suppose a company had an initial investment of $40,000. The cash flow for the next five years are $15,000, $19,000, $15,000, $15,000, and $15,000, respectively. The interest rate is 7%. Enter your answer rounded to 2 DECIMAL PLACES.

- What is the discounted payback period? ___

- If the firm requires a discounted payback periods 4 years or less, will the project be accepted? (NO/YES) Question 4: Because of its age, your car costs $6,000 annually in maintenance expense. You could replace it with a newer vehicle costing $8,700 that would be expected to have a life of 4 years. If your opportunity cost of capital is 7%, by how much must maintenance expense decrease on the new vehicle to justify its purchase?

$ ____ (please round your final result to 2 decimals, but keep as many decimals as possible during calculation) Question 5: Consider the following two tractors a company can purchase. The following tables provide the costs the company will incur (in thousands of dollars) in the lifetime of each tractor.

The transportation firm can only afford one of the tractors. The two tractors have identical production capabilities. The firm's cost of capital is 6%.

Find the present value of the costs of using the two tractors.

- Diesel = ___?

- Gasoline = ___?

Question 6: Growth Enterprises believes its latest project, which will cost $70,000 to install, will generate a perpetual growing stream of cash flows. The cash flow at the end of the first year will be $6,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 4%.

- If the discount rate for the project is 11%, what is the project NPV?

NPV= ___(please round your final result to 2 decimals if necessary)

- What is the internal rate of return (IRR) for the project?

IRR = ___ % (Note: the above answer is in terms of percentage. Please round your final result to 2 decimals if necessary)

\begin{tabular}{|l|l|l|l|} \hline & Initial Cost & Operating Costs per Year & Expected Life \\ \hline Diesel & $17,000 & $14,000 & 6 \\ \hline Gasoline & $5,000 & $11,000 & 3 \\ \hline \end{tabular}