Use Figure 1 (SEE ATTACHED FILE) that shows the net present value profile of two projects B and C to answer the following questions:

1. What is the internal rate of return on project C? (2 marks)

2. Determine the approximate discount rate at which you would be indifferent between the two projects (1 mark)

3. Find the approximate net present value of project C when the discount rate is 8%. (1 mark)

4. If the future cash flows of project B over its four-year life are $1,800, $500, $890, and $3,100, estimate the initial investment. (2 marks)

5. If the two projects are mutually exclusive, over what discount rate range(s) would project C be preferred to project B? Why? (2 marks)

6. If the two projects are independent and the discount rate is less than 10.5%, what decision should the firm make? Why? (2 marks)

7. If projects B and C mutually exclusive and the discount rate is greater than 6%, what decision should the firm make? Why? (2 marks).

QUESTION 3. (12 MARKS) Use Figure 1 that shows the net present value profile of two projects B and C to answer the NPV Profiles 2500 2000 1500 1000 500 0 o% -500 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Net Present Value -1000 -1500 -2000 Project B Project C -2500 -3000 -3500 Discount Rate QUESTION 3. (12 MARKS) Use Figure 1 that shows the net present value profile of two projects B and C to answer the NPV Profiles 2500 2000 1500 1000 500 0 o% -500 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Net Present Value -1000 -1500 -2000 Project B Project C -2500 -3000 -3500 Discount Rate