1. The company is considering a project requiring a $1 million initial investment. Expected cash flows will be $25k in the first year, $100k in the second year, and $200k per year for the next six years.

a. Calculate the project's IRR and the NPV assuming an 8% cost of capital.
b. How much would each of the last six payments have to be to make the project's NPV $100k.


2. The company (Y) had the following income and expense items.

Sales $180,870,000
Cost $110,450,000
Expenses $65,560,000

It received both interest and dividends from the other company (X) of which it owns 30%. The interest received from (X) was $2,430,000 and the dividends were $4,700,000.

a. Calculate Y's tax liability