Q1. A $25 investment generates $27.50 at the end of the year with no risk. If OCC = 10% per annum is this a good investment?
Q2. The Wilson Landscaping Company can buy a piece of equipment for $3,600 at present. The asset encompasses a two-year life, will generate a cash flow of $600 in the first year and $4,200 in the second year. The interest rate is 15%. Compute the project's IRR and NPV. Should the project be taken?
Q3. Rarig Inc. will produce cash flows of $30,000 in year one and $65,000 in year two. Though, if they make an extra instant investment of $20,000, they can expect to encompass cash streams of $55,000 in year 1 and $63,000 in year 2 rather. The OCC = 9% annually. By using the incremental cash flows compute the NPV of the proposed project. Explain why would the IRR be a poor option in this condition?