1. What is Project Zs traditional payback period?

Show Work:

A. 2.0 years

B. 2.125 years

C. 3.0 years

D. less than one year.

2. What is Project As NPV

Show Work:

A. $ 48,685

B. $ 99,400

C. $ 100,000

D. $ 300,000

3. What is Project As IRR?

Show Work:

A. 10.00 %

B. 23.38 %

C. 27.00 %

D. Undeterminable due to risk.

4. What is Project Zs MIRR?

Show Work:

A. 15.92 %

B. 19.44 %

C. 10 % reinvestment rate.

D. Undeterminable due to risk.

b. Which project should Lutz choose? Explain and justify your answer.

c. What other factors might Lutz want to consider in their evaluation of these projects?

Problem 1 Make sure you show all work on every problem. Lutz Rockets, Inc. is considering investing in two mutually exclusive projects. To prevent any corporate espionage in the highly competitive rocket industry, the projects will be referred to as Project A and Project Z. Lutz's required rate of return on any capital investment is 10%. Project A requires an initial cash outlay of $200,000; the project will generate net cash flows of $100,000 per year for each of the next three years. Project Z requires an initial cash outlay of $425,000; it will generate net cash flows of $200,000 per year for the next three years. a. You will calculate the missing Payback, NPV, IRR and MIRR for each project within the multiple- choice questions. Use a financial calculator, and you must show your calculator inputs. Project A Payback= Project Z Payback = 2 X NPV = X NPV = $72,370 IRRE x IRR = 19.44% MIRR = 18.29% MIRRE X