Question 6 (1 point)

An INDEPENDENT project costs $2,500,000 and will return cash flows of $1,200,000 for 3 years and $160,000 for the 3 years after that. In the seventh year, you will need to upgrade the equipment at a net cost of $1,600,000 (<- negative cash flow in year 7)

If you knew the firm's cost of capital rate (discount rate), which of the following measures would you use to determine whether to clearly ACCEPT or REJECT the project?

A) NPV

B) IRR

C) PI

D) Payback Period

E) All of the above

F) NPV and PI

G) NPV, IRR, and PI

H) None of the above

Question 7 (1 point) An INDEPENDENT project costs $5,000,000 and will return cash flows of $1,500,000 for 4 years. If you knew the firm's cost of capital rate (discount rate), which of the following measures would you use to determine whether to clearly ACCEPT or REJECT the project?

A) NPV

B) IRR

C) PI

D) Payback Period

E) All of the above

F) NPV and PI

G) NPV, IRR, and PI

H) None of the above