Question
1a. A project has the following cash flows: Year 0 $(160,000) Year 1 1,000,000 Year 2 (1,000,000) The projects internal rate of return (IRR) in
1a. A project has the following cash flows:
Year 0 | $(160,000) |
Year 1 | 1,000,000 |
Year 2 | (1,000,000) |
The projects internal rate of return (IRR) in decimal form rounded to the nearest .001 is __________
Group of answer choices
Cannot be determined from the information
.25
Both 0.250 and 4.000
4.0
1c
The following sensitivity information for Project A is provided:
Net Present Value | ||
Change from Base Case Level | Volume | Salvage Value |
-30% | $(814,053) | $(57,215) |
-20 | (515,193) | (10,646) |
-10 | 216,350 | 35,923 |
0 | 82,493 | 82,493 |
10 | 381,335 | 129,062 |
20 | 680,178 | 175,631 |
30 | 979,020 | 222,200 |
Which of the following 7 statements best describes the sensitivity information for Project A? Enter the number corresponding to your answer, e.g., 1, 2, 3, 4, 5, 6 or 7.
- Project A is more sensitive to changes in volume
- Project A's base net present value (NPV) is $82,493
- Project A is more sensitive to changes in salvage value
- Project A is equally sensitive to changes in volume and salvage value
- Both 1 and 2 are true
- Both 2 and 3 are true
- Cannot be determined from the information
1b. ch11/12 q5
The following information about a dividend paying stock is provided
- Dividend today, $10
- Expected constant dividend growth, 5%
- Markets required rate of return Stock A, 9%
The price of Stock A to the nearest whole cent is $ __________
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