1. All the following variables are used in computing the cost of debt EXCEPT

a. number of years to maturity.

b. risk-free rate.

2. A significant advantage of the internal rate of return is that it

a. avoids the size disparity problem.

b.. considers all of a project's cash flows and their timing.

3. Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Lithium, Inc.'s required rate of return for these projects is 10%.The modified internal rate of return for Project A is

Select one:

a. 19.19%.

b. 24.18%

4. Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Lithium, Inc.'s required rate of return for these projects is 10%. The equivalent annual annuity amount for project A is

a. $15,024.

b. $18,532