NPV, IRR, Etc FINANCE QUESTIONS
1.value:
5.00 points
What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places. (e.g., 32.16))
Year Cash Flow
0 –$ 5,700
1 1,350
2 1,550
3 1,950
4 1,450
Payback period years
2.value:
5.00 points
An investment project provides cash inflows of $720 per year for eight years. What is the project payback period if the initial cost is $1,925? What if the initial cost is $3,750? What if it is $5,800?
What is the project payback period if the initial cost is $1,925? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))
Payback period years
What is the project payback period if the initial cost is $3,750? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))
Payback period years
What is the project payback period if the initial cost is $5,800? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))
Payback period years
3.value:
5.00 points
Buy Coastal, Inc., imposes a payback cutoff of three years for its international investment projects.
Year Cash Flow (A) Cash Flow (B)
0 –$ 68,000 –$ 78,000
1 27,000 19,000
2 36,000 22,000
3 25,000 34,000
4 12,000 238,000
What is the payback period for both projects? (Round your answers to 2 decimal places. (e.g., 32.16))
Payback period
Project A years
Project B years
Which project should the company accept?
| Project A | |
| Project B |
4.value:
5.00 points
An investment project has annual cash inflows of $3,800, $4,700, $5,900, and $5,100, and a discount rate of 14 percent.
What is the discounted payback period for these cash flows if the initial cost is $6,500? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Discounted payback period years
What is the discounted payback period for these cash flows if the initial cost is $8,600? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Discounted payback period years
What is the discounted payback period for these cash flows if the initial cost is $11,600? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Discounted payback period years
5.value:
5.00 points
An investment project costs $10,000 and has annual cash flows of $2,940 for six years.
What is the discounted payback period if the discount rate is zero percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))
Discounted payback period years
What is the discounted payback period if the discount rate is 6 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))
Discounted payback period years
What is the discounted payback period if the discount rate is 20 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))
Discounted payback period years
6.value:
5.00 points
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:
Year Cash Flow
0 –$ 27,400
1 11,400
2 14,400
3 10,400
If the required return is 16 percent, what is the IRR for this project? (Round your answer to 2 decimal places. (e.g., 32.16))
IRR %
Should the firm accept the following project?
| Yes | |
| No7.value:5.00 pointsA firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:Year Cash Flow0 –$ 28,9001 12,9002 15,9003 11,900What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))NPV $At a required return of 11 percent, should the firm accept this project?YesNoWhat is the NPV for the project if the required return is 25 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))NPV $At a required return of 25 percent, should the firm accept this project?YesNo8.value:5.00 pointsA project that provides annual cash flows of $16,300 for eight years costs $69,000 today.What is the NPV for the project if the required return is 7 percent? (Round your answer to 2 decimal places. (e.g., 32.16))NPV $At a required return of 7 percent, should the firm accept this project?AcceptRejectWhat is the NPV for the project if the required return is 19 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))NPV $At a required return of 19 percent, should the firm accept this project?AcceptRejectAt what discount rate would you be indifferent between accepting the project and rejecting it? (Round your answer to 2 decimal places. (e.g., 32.16))Discount rate %9.value:5.00 pointsWhat is the IRR of the following set of cash flows? (Round your answer to 2 decimal places. (e.g., 32.16))Year Cash Flow0 –$ 15,8001 6,5002 7,8003 6,300IRR %10.value:5.00 pointsA project has the following cash flows:Year Cash Flow0 –$ 15,9001 6,6002 7,9003 6,400What is the NPV at a discount rate of zero percent?NPV $What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))NPV $What is the NPV at a discount rate of 19 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))NPV $What is the NPV at a discount rate of 30 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))NPV $11.value:5.00 pointsGarage, Inc., has identified the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 –$ 29,700 –$ 29,7001 15,100 4,6502 13,000 10,1503 9,550 15,9004 5,450 17,500a-1What is the IRR for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))IRRProject A %Project B %a-2 Using the IRR decision rule, which project should the company accept?Project AProject Ba-3 Is this decision necessarily correct?YesNob-1If the required return is 12 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))NPVProject A $Project B $b-2 Which project will the company choose if it applies the NPV decision rule?Project AProject Bc.At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))Discount rate %12.value:5.00 pointsConsider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 –$ 20,300 –$ 20,3001 8,925 10,2502 9,250 7,8753 8,875 8,775Calculate the IRR for each project. (Round your answers to 2 decimal places. (e.g., 32.16)).IRRProject X %Project Y %What is the crossover rate for these two projects? (Round your answer to 2 decimal places. (e.g., 32.16)).Crossover rate %What is the NPV of Projects X and Y at discount rates of 0%, 15%, and 25%? (Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))Discount rate Project X Project Y0% $ $15% $ $25% $ $13.value:5.00 pointsLight Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:Year Cash Flow0 –$ 38,600,0001 62,600,0002 – 11,600,000a-1What is the NPV for the project if the company requires a return of 11 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))NPV $a-2 Should the firm accept this project?YesNob- This project has two IRR’s, namely _____?____ percent and _____?______percent, in order from smallest to largest. (Note: If you can only compute one IRR value, you should input that amount into both answer boxes in order to obtain some credit.) (Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))14.value:5.00 pointsYear Cash Flow0 –$ 17,1001 9,4002 8,3003 4,800What is the profitability index for the set of cash flows if the relevant discount rate is 11 percent? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))Profitability indexWhat is the profitability index for the set of cash flows if the relevant discount rate is 16 percent? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))Profitability indexWhat is the profitability index for the set of cash flows if the relevant discount rate is 23 percent? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))Profitability index15.value:5.00 pointsThe Angry Bird Corporation is trying to choose between the following two mutually exclusive design projects:Year Cash Flow (I) Cash Flow (II)0 –$ 73,000 –$ 17,1001 33,000 9,2502 33,000 9,2503 33,000 9,250a-1If the required return is 11 percent, what is the profitability index for both projects? (Round your answers to 3 decimal places. (e.g., 32.161))Profitability IndexProject IProject IIa-2 If the company applies the profitability index decision rule, which project should the firm accept?Project IProject Ilb-1What is the NPV for both projects? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))NPVProject I $Project II $b-2 If the company applies the NPV decision rule, which project should it take?Project IProject II16.value:5.00 pointsConsider the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 –$ 347,000 –$ 49,5001 48,000 24,3002 68,000 22,3003 68,000 19,8004 443,000 14,900Whichever project you choose, if any, you require a 15 percent return on your investment.a-1What is the payback period for each project? (Round your answers to 2 decimal places. (e.g., 32.16))Project A_____ years Project B _____yearsa-2 If you apply the payback criterion, which investment will you choose?Project AProject Bb-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))Project A____yearsProject B_____yearsb-2 If you apply the discounted payback criterion, which investment will you choose?Project AProject Bc-1 What is the NPV for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))Project A $______Project B $______c-2 If you apply the NPV criterion, which investment will youchoose?Project AProject Bd-1 What is the IRR for each project? (Round your answers to 2 decimal places. (e.g., 32.16))Project A_____Project B_____d-2 If you apply the IRR criterion, which investment will youchoose?Project AProject Be-1 What is the profitability index for each project? (Do not round intermediate calculations and round your final answers to 3 decimal places. (e.g., 32.161))Project A_____Project B_____17.value:5.00 pointsAn investment has an installed cost of $525,800. The cash flows over the four-year life of the investment are projected to be $223,850, $240,450, $207,110, and $155,820.If the discount rate is zero, what is the NPV?NPV $If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.)NPV $At what discount rate is the NPV just equal to zero? (Round your answer to 2 decimal places. (e.g., 32.16))IRR %18.value:5.00 pointsSlow Ride Corp. is evaluating a project with the following cash flows:Year Cash Flow0 –$ 29,4001 11,6002 14,3003 16,2004 13,3005 – 9,800The company uses an interest rate of 8 percent on all of its projects.Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))MIRR %Calculate the MIRR of the project using the reinvestment approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))MIRR %Calculate the MIRR of the project using the combination approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))MIRR %19.value:5.00 pointsSlow Ride Corp. is evaluating a project with the following cash flows:Year Cash Flow0 –$ 28,7001 10,9002 13,6003 15,5004 12,6005 – 9,100The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects.Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))MIRR %Calculate the MIRR of the project using the reinvestment approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))MIRR %Calculate the MIRR of the project using the combination approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))MIRR %20.value:5.00 pointsAnderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:Year Cash Flow0 –$ 1,260,0001 435,0002 500,0003 395,0004 350,000All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are “blocked” and must be reinvested with the government for one year. The reinvestment rate for these funds is 3 percent.If Anderson uses a required return of 12 percent on this project, what are the NPV and IRR of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))NPV $IRR % |
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