THIS SALT 1 20. Given the following annual net cash flows, determine the internal rate of return to the nearest whole percent of a project with an initial outlay of $750,000. YEAR NET CASH FLOW $500,000 2 $150,000 $250,000 a. 9% b. 11% c. 13% d. 15% 3 - = 21. Lion Construction, Inc. (LCT) is considering the following 3 mutually exclusive projects. Projected cash flows for these ventures are as follows: Plan A Plan B B Plan C Initial Outlay = $3,600,000 Initial Outlay = $6,000,000 Initial Outlay - $3,500,000 Cash Flow: Cash Flow: Cash Flow: Yr l = $-0- Yr 1 = $4,000,000 Yr 1-$2,000,000 Yr 2-0- Yr 2 = 3,000,000 Yr 2 = -0- Yr 3 = -0- Yr 3 = 2,000,000 Yr 3 2,000,000 Yr 4-0- Yr 4= -0- Yr 4= 2,000,000 Yr 5 - $7,000,000 Yr 5 = -0- Yr 5 = 2,000,000 If the LCI has a 12% cost of capital, what decision should be made regarding the projects above? a. Accept plan A b. Accept plan B c. Accept plan C d. Accept Plans A, B and C 22. Bremer Technologies, Inc. (BTI) is evaluating a small project with the following forecasted information: After-tax Accounting After-tax Cash Flow Year Profits from Operations 1 $799 $ $750 2 150 1,000 3 3 200 1,200 Initial outlay = $1,500 a Compute the profitability index if BTT's discount rate is 10%. a. 15.8 b. 1.61 c. 1.81 d. 0.62