QUESTION 1.

The following is a report on the estimated cash flows for 3 projects set up at 3 different locations.

PROJECT	CASH FLOWS t : 0 1 2 3 4 5	(beta)	r (cost of capital)	NPV
Vice City	-100 10 10 10 10 100	A	6	B
San Andreas	-100 80 40 C 0 0	0.7	D	4
Chinatown	-100 30 30 30 30 0	0.5	E	F

Values are in million US$. Annual risk-free rate = 1.5%. Market risk premium = 4.5%.

1. Find the missing values.

2. What is the Internal Rate of Return for the Chinatown project? Is it 7.7%, 5.4% or 6.4%?

3. If only one project can be undertaken, which one is it going to be and why?

4. Determine the total NPV if all 3 projects are undertaken.