7.

Your company has a cost of capital equal to 10%. If the following projects are mutually exclusive, and you only have the information that is provided, which should you accept?

a .....b .....c .....d

 payback (years) 4 .....5 .....2 .....5

irr 18% ..20% ..20% ..12%

npv (millions) 140 75 35 100

 

 

 

 Question 7 options:

A

B

C

B and C

D

 

11. Shannon Industries is considering a project which has the following cash flows:

 

Year

Cash Flow

0

?

1

$2,000

2

3,000

3

4,000

4

2,500

 

 

 

The project has a payback of 2.8 years. The firm's cost of capital is 12 percent. What is the project's net present value NPV?

 

 

12. The capital budgeting director of Uptown Construction Inc. is evaluating a project which costs $250,000, is expected to last for 10 years and produce after-tax cash flows of $48,503 per year. If the firm's cost of capital is 14 percent and its tax rate is 40 percent, what is the project's IRR? Round it to one decimal place in percentage, e.g., 15.4 (for 15.4%).

 

13. The Seattle Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $33,000 per year in Years 1 through 4, and $112,000 in Year 5. This investment will cost the firm $150,000 today, and the firm's cost of capital is 15 percent. What is the NPV for this investment? Round it to a whole dollar.

 

14. The Uptown Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $46,000 per year in Years 1 through 4, and $133,000 in Year 5. This investment will cost the firm $235,000 today, and the firm's cost of capital is 12 percent. What is the payback period for this investment? Round it to two decimal places, e.g., 3.46.

 

15. Great Adventures, Inc. has an investment project, which has a cost of $280,000 today and is expected to provide after-tax annual cash flows of $96,000 for seven years. The firm's cost of capital is 12 percent. Compute the MIRR. (Answer in percentage, but without the % sign, and round it to one decimal place, e.g., 12.4)

AccountingQueen

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Status NEW Posted 20 Aug 2017 01:08 PM My Price 8.00

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