Question Part A

You have the following information on a project's cash flows. The cost of capital is 12.5%.

Year	Cash flows
0	-$123,000
1	28,000
2	31,000
3	36,000
4	41,000
5	49,000

The NPV of the project is $______

(round it two decimal places);

the IRR is percent _____________

(round it to two decimal places);

the payback is years __________________________

round it to two decimal places).

Question Part B

A firm evaluates all of its projects by applying the IRR rule. The cash flows for a project is shown below and the firm requires 15% return on this type of project. First, compute the IRR of the project in box 1. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Then, make the investment decision based on the IRR by inputing either "accept" or "reject" in box 2.

Year Cash Flow 0 $36,500 1 21,000 2 17,000 3 7,000

Question Part C

A company estimates that its required rate of return is 18 percent on its capital investments. It is considering the following independent projects. Select all that are true.

Question 6 options:

It should accept Project D, which requires an initial investment of $1,250,000 and generates a payback of 4.5 years.

It should reject Project E, which has an IRR of 18.5 percent with a payback of 11 years.

It should accept Project B, which has an IRR of 16.5 percent.

It should acceptProject A, which requires an initial investment of $145,000 and has a NPV of $18.

It should accept Project C, which requires an initial investment of $1,000,000 and generates an IRR of 19 percent.

Project F, which has $439 NPV, must have an IRR that is higher than 18%.