A company has invested $500,000 in developing a new product and requires a return of 12% on this investment.
The company has researched the market and has set the selling price for the new product at $300 per unit. At this price, sales volume for next year is forecast to be 500 units. The forecast unit cost is $210.
What is the target cost gap per unit for the coming year?
Give your answer to the nearest whole $.

$30

The cash flows from a project are detailed in the table below.

To the nearest 1%, what is the project's internal rate of return?

• A. 115%
• B. 46%
• C. 8%
• D. 15%

The following data are available for four projects with unequal lives.
A 10% discount rate is appropriate for all four projects.

Which project has the highest equivalent annual benefit?

• A. Project B
• B. Project D
• C. Project C
• D. Project A

A company is deciding whether to invest in project A or project B. A decision tree has been prepared to illustrate the investment decision and its associated possible net present values (NPVs).

Which of the following statements is correct?

• A. decision maker who is risk seeking would select project A.
• B. Project A is more likely to reduce shareholder wealth than to increase it.
• C. Project A will generate a positive net present value of $1.3m.
• D. A risk neutral decision maker would select project B because it shows less variation of outcomes.

A company is investing $200,000 in a project which will generate a cash flow of $60,000 each year for five years starting immediately. The company's cost of capital is 7%.
The net present value of the investment to the nearest $100 is $

63200