1. Veritas Corporation has a gross investment in existing projects of $6,000,000. These projects generated gross cash flow of $1,100,000 and have an expected life of 8 years. The salvage value of these projects is estimated to be $900,000. The firm's cost of capital of 10%. Using the simplified approach, what is the CFROI for these projects?

A. 5.63%

B. 7.73%

C. 10.90%

D. 12.94%

E. 14.37%

2. Atlantic Cruise Lines had a current year operating income (EBIT) of $100 million. The firm plans to retain $25 million for additional capital investments, but does not expect any change in its net working capital. Atlantic expects its operating income to grow 4% in perpetuity and to maintain its existing reinvestment rate. The firm has a capital structure of 60% equity and 40% debt, a cost of equity of 12%, and a pre-tax cost of debt of 8%. Atlantic is in the 40% tax bracket. What is the value of the firm?

A. $432.44 million

B. $567.89 million

C. $710.94 million

D. $863.29 million

E. None of the above