An investor is considering three projects, A, B and C summarized in the table below.  Investment cost Annual operating profit Project life (years)Project A -70000 17000 5Project B -90000 15000 8Project C -60000 13000 6Suppose the investor can borrow funds at an interest rate of 6%, by using the NPV rule with a 5% discount rate, he should choose project _____. When using the IRR rule, he should ____ this project.

Question 3IRR = a% + NPVa (b%-a%)NPVa- NPVbAnglo Ltd has a cost of capital of 12% and it has appraised two projects.Project A has a positive NPV of €5,000 when discounted at 12%and a positive NPV of €3,600 when discounted at 16%.Project B has a positive NPV of €8,000 when discounted at 12%and a negative NPV of €1,000 when discounted at 16%.The projects are mutually exclusive.Required:What is the IRR of Project A and B?• Project A has an IRR of 26.3% and B an IRR of 16.5%• Project A has an IRR of 26.3% and B an IRR of 15.6%• Project A has an IRR of 14.3% and B an IRR of 16.5%• Project A has an IRR of 14.3% and B an IRR of 15.6%Which of the following statements is correct?• Both NPV and IRR indicate that Project A is the more financially viable project.• In order to maximise shareholder wealth Project A is the better project.• Neither Project A or Project B should be accepted from a financial perspective.• Project B will increase shareholder wealth more than Project A at the current cost of capital.

Suppose an investment has an initial capital cost of $500, an ongoing cost of $19.50 per year and an annual benefit of $160. If the project lasts for 5 years and the discount rate is 5%, the NPV is _______, the internal rate of return is  ________ . If financing is required for this project and the financing rate is 15%, then the project should be ________.$108; 12.5%; rejected$103; 12.5%; rejected$108; 12.5%; accepted$103; 12.5%; accepted

What is the NPV of a 6-year project that costs $100,000, has annual revenues of $50,000 and costs of $15,000? Assume the investment can be depreciated for tax purposes straight-line over 6 years, the corporate tax rate is 21%, and the discount rate is 14%.Question 4

There are two projects: project A and project B. Each of the project has the cost of Rs 100,000 and cost of capital for each project is 12 percent. The project's expected net cash flows are as follows: Year Project A Project B 0 Rs (100,000) Rs (100,000) 1 65,000 35,000 2 30,000 30,000 3 30,000 30,000 4 10,000 10,000 a. Calculate NPV for each project. Which project or projects should be accepted if they are independent? b. Calculate IRR for each project. Which project should be accepted if they are mutually exclusive?

Select Any One Of the Following Options: A Project has intial outflow of Rs. 1,50,000, useful life of 5-years and incremental post tax annual cashflow of Rs. 45,000. The appropriate discount rate for the project is 12%, what is the NPV of the project?Rs. -9,728Rs. 10, 332Rs. 12,215Rs. -18,245