Question
1.Calculate the payback period of a project with these cash flows: Period 0: -1000 Period 1: 722 Period 2: 382 Period 3: 250 2.Calculate the
1.Calculate the payback period of a project with these cash flows:
Period 0: -1000
Period 1: 722
Period 2: 382
Period 3: 250
2.Calculate the discounted payback period of a project with a discount rate of 7% and these cash flows:
Period 0: -1000
Period 1: 671
Period 2: 201
Period 3: 1,493
3.Which of the following statements is true about using the internal rate of return (IRR)?
There can only be one IRR.
The decison rule using IRR is the same for both conventional and non-conventional cash flows.
You need to know the cost of capital to make a conclusion with IRR.
You need the cost of capital to calculate the IRR.
4.Compute the internal rate of return for the following cash flows:
Period 0: -1200
Period 1: 930
Period 2: 390
Period 3: 150
5.Compute the modified internal rate of return for the following cash flows using a discount rate of 5%:
Period 0: -909
Period 1: 860
Period 2: 1,039
Period 3: -80
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Introduction to Corporate Finance What Companies Do
Authors: John Graham, Scott Smart
3rd edition
9781111532611, 1111222282, 1111532613, 978-1111222284
