1. A project has an NPV of $200 at a discount rate of 10%. The original calculation ignored working capital. You have determined that the project will require an investment of working capital of $100, which will be freed up at the end of the project in four years. What is your revised estimate of the NPV?
$168
$200
$232
$268
$400
2. A project requires an investment of $500 and will produce a single product that will be sold in one year. The expected sales price of the product is $1,000, and the expected material cost of producing the product is $300. The actual sales price and material cost could be 10% higher or 10% lower than the expected values. The appropriate discount rate is between 13% and 15%. Ignore taxes. What is the NPV in the worst-case scenario?
A. $200
B. $109
C. $48
D. - $4
E.- $61