Your firm has identified three potential investment projects. The projects and their cash flows are shown here:

$1.$Suppose all cash flows are certain and the risk$-$free interest rate is $8\%.$

a $-721$

b $44$

c $24-11$

a$.$ What is the NPV of each project?

b$.$ If the firm can choose only one of these projects, which should it choose based on the NPV decision rule?

c$.$ If the firm can choose any two of these projects, which should it choose based on the NPV decision rule?

$2.$ You have been offered a unique investment opportunity. If you invest $$15,000$ today, you will receive $$3001$ year

from now, $$1,6002$ years from now, and $$15,00010$ years from now.

a$.$ What is the NPV of the investment opportunity if the interest rate is $10\%$ per year? Should you take

the opportunity?

b$.$ What is the NPV of the investment opportunity if the interest rate is $2\%$ per year? Should you take the opportunity?

$3.$ You are head of the Schwartz Family Endowment for the Arts. You have decided to fund an arts school in the San

Francisco Bay area in perpetuity. Every $5$ years, you will give the school $$900,000.$ The first payment will occur $5$

years from today. If the interest rate is $12\%$ per year, what is the present value of your gift?

The $5-$year interest rate is

$\%.($Round to three decimal places.$)$

$4.$Suppose you invest $$2,000$ today and receive $$9,750$ in $5$ years.

a$.$ What is the internal rate of return $($IRR$)$ of this opportunity?

b$.$ Suppose another investment opportunity also requires $$2,000$ upfront, but pays an equal amount at the end of

each year for the next $5$ years. If this investment has the same IRR as the first one, what is the amount you will

receive each year?

a$.$ What is the internal rate of return $($IRR$)$ of this opportunity?

The IRR of this opportunity is

$\%.($Round to two decimal places.$)$