The Winston Co.is considering two mutually exclusive projects with the following cash flows.The incremental IRR is _____ and if the required rate is higher than the crossover rate then project _____ should be accepted. $\begin{array}{cll} \underline{\text { Year }} & \begin{array}{l} \text { Project A } \\ \underline{\text { Cash Flow }} \end{array} & \begin{array}{l} \text { Project B } \\ \underline{\text { Cash Flow }} \end{array} \\ 0 &-\$75,000 &-\$60,000\\ 1 & \$30,000 & \$ 25,000 \\ 2 & \$ 35,000 & \$ 30,000 \\ 3 & \$35,000 & \$ 25,000 \end{array}$

A) 13.94%; A B) 13.94%; B C) 15.44%; A D) 15.44%; B E) 15.86%; A A) 13.94%; A B) 13.94%; B C) 15.44%; A D) 15.44%; B E) 15.86%; A

What is the net present value of a project with the following cash flows and a required return of 12%? \[\begin{array} { c c } \text { Year } & \text { Cash Flow } \\ \hline 0 & - \$ 28,900 \\ 1 & \$ 12,450 \\ 2 & \$ 19,630 \\ 3 & \$ 2,750 \end{array}\]

A) -$287.22 B) -$177.62 C) $177.62 D) $204.36 E) $287.22 A) -$287.22 B) -$177.62 C) $177.62 D) $204.36 E) $287.22

A) cannot be used when deciding between two mutually exclusive projects. B) is more useful to decision makers than the internal rate of return when comparing different sized projects. C) is easy to explain to non-financial managers and thus is the primary method of analysis used by the lowest levels of management. D) is not an as widely used tool as payback and discounted payback. E) is very similar in its methodology to the average accounting return. A) cannot be used when deciding between two mutually exclusive projects. B) is more useful to decision makers than the internal rate of return when comparing different sized projects. C) is easy to explain to non-financial managers and thus is the primary method of analysis used by the lowest levels of management. D) is not an as widely used tool as payback and discounted payback. E) is very similar in its methodology to the average accounting return.

You are analyzing two mutually exclusive projects and have developed the following information.What is the incremental IRR? $\begin{array}{cll} \underline{\text { Year }} & \begin{array}{l} \text { Project A } \\ \underline{\text { Cash Flow }} \end{array} & \begin{array}{l} \text { Project B } \\ \underline{\text { Cash Flow }} \end{array} \\ 0 &-\$ 84,500 &-\$76,900\\ 1 & \$ 29,000 & \$ 25,000 \\ 2 & \$ 40,000 & \$ 35,000 \\ 3 & \$ 27,000 & \$ 26,000 \end{array}$

A) 11.11% B) 13.01% C) 14.91% D) 16.75% E) 17.90% A) 11.11% B) 13.01% C) 14.91% D) 16.75% E) 17.90%

Exam 5: Net Present Value and Other Investment Rules

The Winston Co.is considering two mutually exclusive projects with the following cash flows.The incremental IRR is _ and if the required rate is higher than the crossover rate then project _ should be accepted. Project A Project B 0 - \7 5,000 - \6 0,000 1 \3 0,000 \ 25,000 2 \ 35,000 \ 30,000 3 \3 5,000 \ 25,000

(Multiple Choice)

4.8/5

(43)

Question 21

What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5%. Year Cash Inflows 1 \ 4,375 2 \ 0 3 \ 8,750 4 \ 4,100

(Multiple Choice)

4.8/5

(40)

Question 22

The discounted payback period rule:

(Multiple Choice)

4.9/5

(37)

Question 23

You are considering a project with an initial cost of $4,300.What is the payback period for this project if the cash inflows are $550, $970, $2,600, and $500 a year over the next four years?

(Multiple Choice)

4.8/5

(30)

Question 24

The payback period rule is a convenient and useful tool because:

(Multiple Choice)

4.9/5

(34)

Question 25

The internal rate of return is:

(Multiple Choice)

4.8/5

(37)

Question 26

The profitability index is the ratio of:

(Multiple Choice)

4.9/5

(36)

Question 27

Which of the following methods of project analysis are biased towards short-term projects? I.internal rate of return II.net present value III.payback IV.discounted payback

(Multiple Choice)

4.9/5

(43)

Question 28

Using internal rate of return, a conventional project should be accepted if the internal rate of return is:

(Multiple Choice)

4.9/5

(39)

Question 29

The Ziggy Trim and Cut Company can purchase equipment on sale for $4,300.The asset has a three-year life, will produce a cash flow of $1,200 in the first and second year, and $3,000 in the third year.The interest rate is 12%.Calculate the project's Discounted Payback and Profitability Index assuming end of year cash flows.Should the project be taken? If the Average Accounting Return was positive, how would this affect your decision?

(Essay)

4.8/5

(36)

Question 30

What is the net present value of a project with the following cash flows and a required return of 12%? Year Cash Flow 0 -\ 28,900 1 \ 12,450 2 \ 19,630 3 \ 2,750

(Multiple Choice)

4.8/5

(41)

Question 31

You are trying to determine whether to accept project A or project B.These projects are mutually exclusive.As part of your analysis, you should compute the incremental IRR by determining:

(Multiple Choice)

4.9/5

(46)

Question 32

Jack is considering adding toys to his general store.He estimates that the cost of inventory will be $4,200.The remodeling and shelving costs are estimated at $1,500.Toy sales are expected to produce net cash inflows of $1,200, $1,500, $1,600, and $1,750 over the next four years, respectively.Should Jack add toys to his store if he assigns a three-year payback period to this project?

(Multiple Choice)

4.8/5

(34)

Question 33

Net present value:

(Multiple Choice)

4.9/5

(36)

Question 34

The possibility that more than one discount rate will make the NPV of an investment equal to zero is called the _____ problem.

(Multiple Choice)

4.8/5

(39)

Question 35

A project has an initial cost of $8,500 and produces cash inflows of $2,600, $4,900, and $1,500 over the next three years, respectively.What is the discounted payback period if the required rate of return is 7%?

(Multiple Choice)

4.9/5

(41)

Question 36

Consider an investment with an initial cost of $20,000 and is that expected to last for 5 years.The expected cash flows in years 1 and 2 are $5,000, in years 3 and 4 are $5,500 and in year 5 is $1,000.The total cash inflow is expected to be $22,000 or an average of $4,400 per year.Compute the payback period in years.

(Multiple Choice)

4.9/5

(39)

Question 37

Yancy is considering a project which will produce cash inflows of $900 a year for 4 years.The project has a 9% required rate of return and an initial cost of $2,800.What is the discounted payback period?

(Multiple Choice)

4.9/5

(41)

Question 38

You are analyzing two mutually exclusive projects and have developed the following information.What is the incremental IRR? Project A Project B 0 -\ 84,500 - \7 6,900 1 \ 29,000 \ 25,000 2 \ 40,000 \ 35,000 3 \ 27,000 \ 26,000

(Multiple Choice)

4.9/5

(36)

Question 39

If there is a conflict between mutually exclusive projects due to the IRR, one should:

(Multiple Choice)

4.7/5

(42)

Question 40

Showing 21 - 40 of 97

Exam 5: Net Present Value and Other Investment Rules

What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5%. Year Cash Inflows 1 \ 4,375 2 \ 0 3 \ 8,750 4 \ 4,100

The discounted payback period rule:

You are considering a project with an initial cost of $4,300.What is the payback period for this project if the cash inflows are $550, $970, $2,600, and $500 a year over the next four years?

The payback period rule is a convenient and useful tool because:

The internal rate of return is:

The profitability index is the ratio of:

Which of the following methods of project analysis are biased towards short-term projects? I.internal rate of return II.net present value III.payback IV.discounted payback

Using internal rate of return, a conventional project should be accepted if the internal rate of return is:

What is the net present value of a project with the following cash flows and a required return of 12%? Year Cash Flow 0 -\ 28,900 1 \ 12,450 2 \ 19,630 3 \ 2,750

You are trying to determine whether to accept project A or project B.These projects are mutually exclusive.As part of your analysis, you should compute the incremental IRR by determining:

Net present value:

The possibility that more than one discount rate will make the NPV of an investment equal to zero is called the _____ problem.

A project has an initial cost of $8,500 and produces cash inflows of $2,600, $4,900, and $1,500 over the next three years, respectively.What is the discounted payback period if the required rate of return is 7%?

Yancy is considering a project which will produce cash inflows of $900 a year for 4 years.The project has a 9% required rate of return and an initial cost of $2,800.What is the discounted payback period?

You are analyzing two mutually exclusive projects and have developed the following information.What is the incremental IRR? Project A Project B 0 -\ 84,500 - \7 6,900 1 \ 29,000 \ 25,000 2 \ 40,000 \ 35,000 3 \ 27,000 \ 26,000

If there is a conflict between mutually exclusive projects due to the IRR, one should:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Long-Term Planning

Discounted Cash Flow Valuation

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Risk, Cost of Capital, and Capital Budgeting

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Issuing Securities to the Public

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

Short-Term Finance and Planning

Cash Management

Credit and Inventory Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters