You have the following project available:

Calculate the numbers that belong in the blank cells for project A to D.

Hint: For some projects, a second positive IRR may exist. For Project D, the payback period may be easier to express in words.

1. Add the payback periods for both Projects A and B, i.e., calculate: X = Payback Period of Project A + Payback Period of Project B.

a. 1

b. 2

c. 3

d. 4

e. 5

f. 6

g. 7

h. Project A never pays back the initial investment.

2. The payback period for Project D is:

a. 1

b. 2

c. 3

d. 4

e. 5

f. 6

g. 7

h. Project D never pays back the initial investment.

3. What is (are) the IRR(s) of Project C?

a. 0% only

b. 120.0% only

c. 13.6% is one of the IRRs and another IRR exists

d. 120.0% is one of the IRRs and another IRR exists

e. 13.6% only

f. 0% is one of the IRRs and another IRR exists

g. Project C has four IRRs.

h. No IRR exists for Project C.

4. What is the IRR of Project B?

a. 13.7%

b. 12.0%

c. 6.7%

d. 9.3%

e. 11.6%

f. 15.3%

g. Project B has multiple IRRs.

h. IRR doesn't exist.

5. What is the NPV of Project C?

a. $37,321.3

b. $74,444.8

c. -$10,000.0

d. $58,476.0

e. $692.9

f. $7,197.9

g. $8,543.6

h. The NPV cannot be calculated because the last cash flow is negative.

6. What is the profitability index (PI) of Project A?

a. 10%

b. -$50,000.0

c. $3,384.4

d. 1.00

e. 1.07

f. 15.5%

g. 2.00

h. The PI is negative.

Time Period 0 1 2 3 4 Discount Rate Payback Period PI NPV IRRI IRR2 (if it exists) Project A -$50,000 $35,000 $15,000 $9,000 $2,000 $3,000 11.00% Project A Project Cash Flows Project B -$50,000 $2,000 $4,000 $16,000 $29,000 $32,000 11.00% Project B 1.10 $4,840.99 Project C -$7,000 $40,000 $12,000 -$55,000 15.00% Project C Project D -$10,000 $6,000 $2,000 6.00% Project D