1. RS Bank offers a simple interest rate of 6%. If an investment of $300 is made, how much interest will be accumulated after 5 years?

2. Which of the following defines capital expenditure?

3. Which of the following is a sunk cost?

4. Company G has decided whether or not to invest in a particular project which would cost $350,000 now and generate net cash flows of $40,000 per year for 12 years. What is the NPV for this project, if the cost of capital was capped at 7%?

5. Company M is considering investing in either project A or project B. Both projects require the same initial investment. However, project A is expected to generate net cash flows of $120,000 for 4 years, while project B is expected to generate net cash flows of $70,000 for 7 years. If the cost of capital for company M is 6%, which of the following statements is correct?

6. An investment has a NPV of $7200 at 8% and -$2500 at 13%. What is the IRR on investment?

7. Using a cost of capital of 10%, the NPV of project E is $12,000, but at a cost of capital of 18%, the NPV is -$4,000. What is the Internal Rate of Return(IRR) for project E?

8. Company L has decided whether or not to invest in a particular project which would cost $550,000 now and generate net cash flows of $35,000 per year in perpetuity. What is the present value of cash flows this project will generate, if the cost of capital was capped at 5%?

10. Company T is considering 4 investment projects; W, X, Y & Z. All four projects require the same initial investment of $300,000. Company T is hoping to invest in 2 projects. Project W is expected to generate net cash flows of $60,000 for 7 years, project X is expected to generate net cash flows of $90,000 for 4 years, project Y is expected to generate net cash flows of $110,000 for 3 years and project Z is expected to generate net cash flows of $180,000 for 2 years. If the cost of capital is 5% for company T, then which two projects should be selected based on the highest NPVs generated?