(Questions 9-14) A firm is considering two projects both with a life of five years. Project COLT will cost $20,000 and return after tax cash flows of $5,000;$6,000;$7,000;$8,000 and $10,000. Project LUCKY costs $17,000 and after tax cash flows will be $6,000 annually. The company's WACC is 10%. 9. Compare the NPVs of the two projects. a) LUCKY is $989 more than COLT c) COLT is $1,071 more than LUCKY b) LUCKY is $1,125 more than COLT d) COLT is $692 more than LUCKY 10. Compare the IRRs of the two projects. a) LUCKY is 0.15% larger than COLT c) LUCKY is 1.97% larger than COLT b) COLT is 1.92% larger than LUCKY d) COLT is 2.05% larger than LUCKY 11. According to the Payback period which project is the better investment? a) Adopt Lucky. LUCKY finishes in 3 years; whereas COLT finishes in 4.75 Years b) Adopt Lucky. LUCKY finishes in 2.83 years; whereas COLT finishes in 3.25 Years c) Adopt COLT. COLT finishes in 3.75 Years; whereas LUCKY finishes in 3.67 years d) Adopt COLT. COLT finishes in 4.88 Years; whereas LUCKY finishes in 3.5 years 12. Use the time value adiusted method to compute the payback period for Project COLT. a) 3.57 Yrs b) 3.67Yrs c) 3.96 Yrs d) 4.22Yrs 13. What would be the return on Project LUCKY if its cash flows were invested at the corporate rate rather than the project's IRR. (Find the MIRR) a) 15.27% b) 16.59% c) 11.62% d) 13.7% 14. What would the NPV be for each project be at the cross over rate. (Cross over is the WACC that makes both projects equally profitable) a) $3,392 b) $1,067 c) $3,475 d) $313 15. A Firm has a WACC of 8%. A proposed project has an initial outlay of $3,000 and cash flows as follows: First year $1,000, Second year $500, Third year $1,500 and fourth year $2,000. Because the project has non-normal cash flows you must compare the MIRR to WACC. So, what is the MIRR? a) 8.98% b) 9.22% c) 10.57% d) 11.08