# Essay on Introduction to Finals 2

1111 Words5 Pages
This is one of two finals that you need to score a minimum of 70% on to be eligible for a certificate. [Recall that you should have also obtained a minimum score of 70% on at least 5 out of 9 of the assignments.] If you do not score at least 70% on this test, you can try Final 2. You can of course try both finals regardless. This system is unlike the assignments in that you do not get two attempts on the same exam, but one attempt each on two separate exams. Also, unlike the assignments, these exams are timed. You have 100 minutes to finish each exam after you start it. So please find a stretch of two uninterrupted hours to attempt each exam. Finally, and most importantly, YOU ARE NOT ALLOWED TO COLLABORATE WITH ANYONE USING ANY MEANS OF…show more content…
Question 5 (15 points) Your boss has requested that you analyze two projects for him and pick the one you would recommend for investment. Both projects have the same risk because they are in the same business, and their cash flows are: Project A (Year 0: -\$100,000; Year 1: \$30,000; Year 2: \$40,000; Year 3: \$50,000; Year 4: \$100,410); Project B (Year 0: -\$100,000; Year 1: 0; Year 2: \$10,000; Year 3: \$10,000; Year 4: \$224,990). Which project will you recommend if the discount rate is 35%? Your Answer Score Explanation Neither one. clip_image001[3] 15.00 Correct. You understand that IRRs do not matter but NPVs do. Total 15.00 / 15.00 Question Explanation Analyzing your ability to make decisions based on sound analysis. A very common situation in the real world. Question 6 (15 points) Your company is evaluating two different water purification systems for its main factory: Option X will cost \$3.00 million and \$500,000 annually to operate, and has a life of five years. Option Y will cost \$4.80 million and \$20,000 per year to operate, and has a life of six years. Straight-line depreciation is to be used, and both systems will be depreciated fully over their respective lives. The systems will have no salvage values at the end of their respective lives. Suppose your company is very profitable, has a discount rate of 10%, and the corporate tax rate is 40%.