Problems
1.Your company is considering the following project:YearCash Flow0-$14,00018,00026,00032,00043,00056,000WACCJ=20% 1)Compute the payback period, discounted payback period, NPV, and IRR for this project.

2)Should the project be accepted based on the payback period, assuming the company has apayback requirement of 3 years? Explain why it should or should not be accepted.
3)Should the project be accepted based on the discounted payback period, assuming the company has a payback requirement of 3 years? Explain why it should or should not be accepted.
4)Should the project be accepted based on the NPV? Explain why it should or should not beaccepted.
5)Should the project be accepted based on the IRR? Explain why it should or should not be accepted.
2.Your company is considering two independentprojects, A and B, whose costs and expected cash flows are shown in the following table:
Year
A
B

0-25,000-25,00018,000026,000038,0000415,00040,000The projects are equally risky, and their WACC is 8 percent. Assume the firm has unlimited funds available. 1)Compute the NPV and IRR of each project.
2)Indicate which project(s) should be purchased and explain why.
3.Is the following project normal or abnormal? Also, what are the NPV and IRR for the project?YearC0-14,0001-8,00026,000312,000412,000
4.Your company is considering two mutually exclusiveprojects, C and D, whose costs and expected cash flows are shown in the following table:YearCD0-14,000-22,00018,0008,00026,0008,00032,0008,00043,0008,000The projects are equally risky, and their WACC is 12 percent.