1. Winston Clinic is evaluating a project that costs $62,125 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%.

What year does the project have payback?

Choice: Year 3

Choice: Year 6

Choice: Year 8

Choice: Cannot tell with this information

2. Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of $12,000 per year for eight years.

The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%. What is the projects NPV?

Choice: $3,495.25

Choice: $8,503.50

Choice: $9,611.68

Choice: $7,487.87

3. Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of $12,000 per year for eight years.

The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%. What is the projects IRR? (hint: remember to put the answer as a percentage)

Choice: 17.3%

Choice: 13.5%

Choice: 7.9%

Choice: 5.4%

4. Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of $12,000 per year for eight years.

The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%. What is the projects MIRR? (hint: remember to put the answer as a percentage).

Choice: 13.9%

Choice: 14.5%

Choice: 5.80%

Choice: 22.1%

5. The director of capital budgeting for Big Sky Health System, Inc. has estimated the following cash flows for a new service and has a cost of capital of 10%. What is the projects payback period?

Year Annual Cash Flows Project Cost of Capital

0 $ (125,000) 10%

1 $ 75,000

2 $ 55,000

3 $ 25,000

Choice: 4 years

Choice: Not enough information to tell

Choice: 1.91 years

Choice: 2.4 years