Reference no: EM131854904

1. A company is considering a new four-year project with an initial investment requirement of $75,000. The equipment will be depreciated straight-line to zero over the life of the project and will be worthless at the end of the project. Sales are estimated at $142,000 with costs of $88,200. The tax rate is 34%. What is the project OCF?

a) $28,394

b) $30,506

c) $37,900

d) $39,394

e) $41,883

2. Paul is evaluating an investment project that is expected to produce cash flows of $5,000 each year for the next 4 years and $8,000 each year for the following 2 years. The IRR of this 6-year project is 11 percent. If the firm’s cost of capital is 8 percent, what is the project’s NPV?

a) $2,138

b) $2,250

c) $2,358

d) $2,438

e) $2,510