1. Laketown Enterprises is considering a project that has thefollowing cash flows. It’s WACC is 10%. Year 0, 1, 2, and 3 Cashflows are $950, $500, $400, and $300, respectively.

a. What is the project’s payback period?

b. What is the project’s NPV?

c. What is the project’s IRR?

d. What is the project’s discounted payback period?

2. Cole Trucking, the company you work for, is considering a newproject whose data are shown below. What is the project's Year 1cash flow? Sales revenues, each year $62,500 Depreciation $8,000Other operating costs $25,000 Interest expense $8,000 Tax rate35.0%

3. Chattanooga Enterprises is selling off some old equipment itno longer needs because its associated project has come to an end.The equipment originally cost $22,500, of which 75% has beendepreciated. The firm can sell the used equipment today for $6,000,and its tax rate is 40%. What is the equipment's after-tax salvagevalue for use in a capital budgeting analysis? Note that if theequipment's final market value is less than its book value, thefirm will receive a tax credit as a result of the sale.

4. Foxx Manufacturing is considering manufacturing a new styleof shirt, whose data are shown below. The equipment to be usedwould be depreciated by the straight-line method over its 3-yearlife and would have a zero salvage value, and no new workingcapital would be required. Revenues and other operating costs areexpected to be constant over the project's 3-year life. However,this project would compete with other Foxx's products and wouldreduce their pre-tax annual cash flows. What is the project's NPV?(Hint: Cash flows are constant in Years 1-3.) WACC 10.0% Pre-taxcash flow reduction for other products (cannibalization) $5,000Investment cost (depreciable basis) $80,000 Straight-line deprec.rate 33.333% Sales revenues, each year for 3 years $67,500 Annualoperating costs (excl. deprec.) $25,000 Tax rate 35.0%