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If Project K costs $30,000, its expected net cash inflows are $6,000 per year for 8 years,




1. If Project K costs $30,000, its expected net cash inflows are $6,000 per year for 8 years;and its WACC is 10%, what is the project?s NPV?;a. $1,942 b. $2,010 c. $2,182 d. $2,243;2. A firm with a WACC of 8% is considering the following mutually exclusive projects;0 1 2 3 4 5;A -$400 $55 $55 $55 $225 $225;B -$600 $300 $300 $50 $50 $49;Which project(s) would you recommend?;a. Accept Project A only.;b. Accept Project B only.;c. Accept Projects A and B.;d. Accept neither Project A nor B.;Use the following information to answer questions #3 thru #6 below;Year: 0 1 2 3 4 5;Project A Cash Flows: -4,000 1,000 800 1,200 1,500 2,000;Project B Cash Flows: -4,000 1,000 1,500 1,000 600 500;The cost of capital for both projects is 12%.;3. What is the NPV for Project B?;a. -$96 b. -$487 c. -$535 d. $135;4. What is the IRR for Project A?;a. 17.8% b. 14.2% c. 12.7% d. 16.1%;5. What is the payback for Project B?;a. 4.1 years b. 3.8 years c. 3.5 years d. 2.8 years;6. If Projects A and B are independent, which project(s) should be accepted?;a. A only b. B only c. Both A and B d. Neither A nor B. Calculate the Modified IRR for the following cash flows if the cost of capital is 10%;Year: 0 1 2 3;Cash Flows: -1,200 600 600 300;a. 4.9% b. 8.7% c. 12.0% d. 10.6%;8. What is the ?crossover rate? for the NPV profile of Projects Y and Z?;Year: 0 1 2 3;Project Y: -100 50 40 30;Project Z: -100 20 51 53;a. 3.8%;b. 4.7%;c. 6.2%;d. 7.8%;e. cannot be determined with the information given;9. In question #8 above, if Projects Y and Z are mutually exclusive, and the cost of capital is;6%, which project(s) should be accepted?;a. Accept Project Y only.;b. Accept Project Z only.;c. Accept Projects Y and Z.;d. Accept neither Project Y nor Z.;10. Which of the following statements is true?;I. If the IRR exceeds the cost of capital, the NPV is negative.;II. If the IRR equals the cost of capital, the NPV is $0.;III. If the NPV is negative, the IRR must be less than 0.;a. I only b. II only c. I and II d. I, II and III e. II and III;Additional Requirements;Min Pages: 2;Level of Detail: Only answer needed;Other Requirements: please make sure answers are all correct


Paper#25494 | Written in 18-Jul-2015

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