Use the following information to address the questions below.

PharmPic is considering the following project with the following cash flows:

PharmPic Project

Period Cash Flow

0 -$50,000

1 -$7,000

2 -$40,000

3 $10,000

4 $5,000

5 $20,000

6 $25,000

7 $32,000

8 $37,000

DosageDoc is considering the following project with the following cash flows:

DosageDoc Project

Period Cash Flow

0 -$50,000

1 70,000

2 -40,000

3 30,000

4 -7,000

PharmPic Projects cash flows are semi-annually. PharmPic has the following two financing choices; loan with an APR of 6.5% compounding semi-annually or a loan with an APR of 6.35% compounding quarterly.

DosageDoc Projects cash flows are annually. DosageDoc has the following two financing choices; loan with a 8.45% rate over four years or a loan based with an APR of 2.5% compounding daily.

16) Which firms project satisfies the most decision rules when the current payback period requirement is a half a year and the discounted payback period requirement is 1 years. Do a complete analysis of these projects. Include all the decision rules and considerations.

17) Based on your analysis in the previous problem (#16) rank the decision rules from best to worst and discuss the criteria used to evaluate the quality of a valuation decision rules for both firms projects.

18) Explain how you used and interpreted the interest rates in the previous projects (#16).

19) What strategies are available to shareholders to help ensure that managers are motivated to act in the interest of the shareholders rather than their own interest?

20) What are the four financial statements that all public companies (including PharmPic and DosageDoc) produce and discuss their content?