Question 8: Capital Budgeting Question (7 parts, 10 points total) (Show all work.)

Yr A B C D

0 -1000 -1000 -1000 -1000

1 100 0 100 200

2 900 0 200 300

3 100 300 300 500

4 -100 700 400 500

5 -400 1300 1250 600

______ 8a. What is the Internal Rate of Return (IRR) for Project B?

______ 8b. What is the Internal Rate of Return (IRR) for Project C?

______ 8c. What is the Internal Rate of Return (IRR) for Project D?

Assuming an opportunity cost of capital of 7.5%, what is the Net Present Value (NPV) for:

______ 8d. Project A?

______ 8e. Project B?

______ 8f. Project C?

______ 8g. Project D?

_____9. What is XYZ Corp.s 1-EBIT, 2- Net Cash Flow, 3-Operating Cash Flow, and 4-Free Cash Flow, given: (10 points)

XYZ Corp. (for 2020)

Revenue $10,000,000

Wages: $5,000,000

Rent (mixed space, production and administration): $1,000,000

Selling, General, & Administrative Expenses: $3,000,000

D&A: $1,000,000

Property, Plant & Equipment investment: $1,500,000

Tax Rate: 30%

NOWC (2020): $1,000,000

NOWC (2019): $800,000

Assume no other income, expenses or cash flows.

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_____10. What is a futures contract? How does that compare against a forward? What is a Call Option? How does it compare against a Put Option? (10 points)