15 a b C d An investment cost $10,000 with expected cash flows of $3,000 for 5 years. The discount rate is 15.2382%. The NPV is and the IRR is for the project SO: 15.238296 $3.3327.2242% $5,000,0% Can not answer without one or the other value as input. None of the above 16 3 b c d C b c c A mutually exclusive project is a project whose acceptance or rejection has no effect on other projects NPV is always negative IRR is always negative acceptance or rejection affects other projects, cash flow pattern exhibits more than one sign change 17 The profitability index is the ratio of average net income to average investment internal rate of return to current market interest rate net present value of cash flows to internal rate of return d net present value of cash flows to average accounting return present value of cash flows to initial investment cost Use the following information to answer questions 18-21: Master Minds Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $1.2 million. The fixed asset will be depreciated using MACRS and it falls into the 3-year class. The project is estimated to generate $1,600,000 in annual sales, with costs of $400,000. The tax rate is 35% and the required rate of return for Master Minds is 15%. (MACRS table should be handed in the exam) 18 What is the depreciation tax shield for year 1? S139,986 b. $300,000 $399,960 d $420,000 a 19. a b. c d What is the OCF for year 1? S876,654 $1,179,960 $1,200,000 $919.986 What is the book value of the fixed assets at the end of the project (year3)? $300,000 $266,760 $88,920 SO 20. b. C d 21 a b. C d. If they sell the fixed assets for $200,000 at the end of year three, what will be the after-tax cash in-flow to Master Minds, Inc from the sale $200,000 $161,122 $72,202 $130,000