11. A major disadvantage of the payback period is that it

a.

Is useless as a risk indicator.

b.

does not Ignores cash flows beyond the payback period.

c.

Does not directly account for the time value of money

7. Mohammed Bayyoud corp. expects to earn $600,000 if the economy is good and only $200,000 if the economy is bad. Mohammed estimates a 65% probability of a good economy and a 35% probability of a bad economy. The NPV of the project with a discount rate of 10%? Can Mohammed accept the project?

a.

NPV $18,181.82, No Mohammed Should reject the project

b.

NPV $19,181.82, No Mohammed Should Accept the project

c.

NPV $18,181.82, yes Mohammed should accept the projects

d.

NPV $19,181.82, Yes Mohammed Should Accept the project

14. Mr. Bayyoud is considering an investment of $250,000 in a startup. The cost of capital for the investment is 13%. Following cash flows are expected: year 0($250,000), year 1 $50,000, year 2 $100,000, year 3 $200,000 The MIRR for the proposed investment is.

a.

13.66%

b.

14.66%

c.

15.78%

d.

14.78%