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Finance Ten Questions Assignment




Question;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. $2,2432. 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 $225B -$600 $300 $300 $50 $50 $49Which 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 5Project A Cash Flows: -4,000 1,000 800 1,200 1,500 2,000Project B Cash Flows: -4,000 1,000 1,500 1,000 600 500The cost of capital for both projects is 12%.3. What is the NPV for Project B?a. -$96 b. -$487 c. -$535 d. $1354. 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 years6. 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 3Cash Flows: -1,200 600 600 300a. 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 3Project Y: -100 50 40 30Project Z: -100 20 51 53a. 3.8%b. 4.7%c. 6.2%d. 7.8%e. cannot be determined with the information given9. In question #8 above, if Projects Y and Z are mutually exclusive, and the cost of capital is6%, 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


Paper#48272 | Written in 18-Jul-2015

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