Sharp Co, a large stock-exchange-listed company, is evaluating an investment proposal to manufacture Product W33, which has performed well in test marketing trials conducted recently by the companys research and development division. Product W33 will be manufactured using a fully-automated process which would significantly increase noise levels from Sharp Cos factory. For investment appraisal purposes, Sharp Co uses a nominal (money) discount rate of 10% per year. The following information relating to this investment proposal has now been prepared:

Year	Year 0	Year 1	Year 2	Year 3	Year 4
Initial investment	(2,000,000)
Income		1,236,000	1,485,400	2,622,000	1,012,950
Operating costs		(676,000)	(789,372)	(1,271,227)	(620,076)

20. Calculate the net present value (NPV) for the investment proposal, and select a correct answer:

1. 378,738
2. 366,722
3. 454,734
4. 478,398

21. Calculate the internal rate of return (IRR) for the investment proposal, and select a correct answer:

1. 18.2%
2. 17.3%
3. 19.1%
4. 16.8%

22. Calculate the discounted payback period for the investment proposal, and select a correct answer (round to 1 decimal):

1. 3.2 years
2. 2.9 years
3. 2.3 years
4. 1.9 years

23. Whether Sharp Co should accept or reject this project based on NPV investment appraisal method?

A. Accept because NPV is positive;

B. Accept because NPV is negative;

C. Reject because NPV is positive;

D. Reject because NPV is negative.

24. If Sharp Co would like to pay off the initial investment within 2 years and start making profits, whether Sharp Co should accept or reject this project?

A. Accept because payback period is longer than 2 years;

B. Accept because payback period is shorter than 2 years;

C. Reject because payback period is longer than 2 years;

D. Reject because payback period is shorter than 2 years.

25. Whether Sharp Co should accept or reject this project based on IRR investment appraisal method?

A. Accept because IRR is higher than discount rate of 10%;

B. Accept because IRR is lower than discount rate of 10%;

C. Reject because IRR is higher than discount rate of 10%;

D. Reject because IRR is lower than discount rate of 10%.