A firm has the following investment alternatives:

Cash Inflows
Year A B C
1 $ 830 $ 2,622 —
2 830 — —
3 830 — $ 3,230
Each investment costs $2,300; investments B and C are mutually exclusive, and the firm’s cost of capital is 9 percent. Use Appendix A, Appendix B and Appendix D to answer the questions. Assume that the investments are not mutually exclusive and there are no budget restrictions.

What is the net present value of each investment? Use a minus sign to enter a negative values, if any. Round your answers to the nearest dollar.
A: $

B: $

C: $

According to the net present values, which investment(s) should the firm make?
The firm should make investment(s) -Select-ABCA and BA and CItem 4 .

What is the internal rate of return on each investment? Round your answers to the nearest whole number.
A: %

B: %

C: %

According to the internal rates of return, which investment(s) should the firm make?
The firm should make investment(s) -Select-ABCA and BA and CItem 8 .

According to both the net present values and internal rates of return, which investments should the firm make?
The net present value and internal rate of return lead to -Select-the same decisiondifferent decisionsItem 9 so the firm should -Select-select investment Aselect investment Bselect investment Cselect investments A and Bselect investments A and Cresolve the conflict between B and CItem 10 .

If the firm could reinvest the $2,622 earned in year 1 from investment B at 10 percent, which investment(s) should the firm make? Round your answer to the nearest dollar.
Terminal value of investment B: $

The firm should make investment(s) -Select-ABCA and BA and CItem 12 .

Would the answer be different if the rate were 12 percent? Round your answer to the nearest dollar.
Terminal value of investment B: $

The firm should make investment(s) -Select-ABCA and BA and CItem 14 .

If the firm’s cost of capital had been 10 percent, what would be investment A’s internal rate of return? Round your answer to the nearest whole number.
%

The payback method of capital budgeting selects which investment?
The payback method of capital budgeting selects investment -Select-ABCItem 16 .