Question
1.A project is expected to generate $2M per year forever. Find the profitability index if the required return for the project is 12% and the
1.A project is expected to generate $2M per year forever. Find the profitability index if the required return for the project is 12% and the initial investment is $10M. a.1.67 b.1.20 c.1.06 d.1.43 e.0.98
2.you are a manager with an investment budget of $100 million. Which of the following non mutually exclusive projects would you choose?
Project | Initial Investment ($MM) | NPV ($MM) |
A | 50 | 10 |
B | 40 | 5 |
C | 30 | 10 |
D | 20 | 5 |
E | 10 | 1 |
F | 10 | 1.5 |
G | 20 | 3 |
H | 30 | 3 |
"B, C, D, E" | ||
"A, C, D" | ||
"C, E, F, G, H" | ||
"A, B, F" | ||
"B, C, H" |
3.A project is expected to generate $1.5M per year forever. Find the IRR if the initial investment is $10M.
15.0% | ||
13.4% | ||
11.8% | ||
13.0% | ||
15.7% |
4.
-
Project A requires an initial investment of $50M and generates $10M per year forever. Project B requires an initial investment of $125M and generates $20M per year forever. What is the crossover rate for these two projects?
15.4%
26.9%
13.3%
5.6%
9.1%
5.
hat is the payback period of the following project?
Year 0 | ($170) |
Year 1 | $100 |
Year 2 | $100 |
Year 3 | $100 |
1.7 years | ||
5 years | ||
2 years | ||
7.5 years | ||
3.3 years |
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