1.NPV

Project K costs $70,000, its expected cash inflows are $14,000 per year for 12 years, and its WACC is 14%. What is the project's NPV? Round your answer to the nearest cent.

2. Payback period

Project K costs $60,000, its expected cash inflows are $15,000 per year for 12 years, and its WACC is 10%. What is the project's payback? Round your answer to two decimal places.

3. Capital budgeting criteria: mutually exclusive projects

Project S costs $10,000 and its expected cash flows would be $6,500 per year for 5 years. Mutually exclusive Project L costs $32,500 and its expected cash flows would be $13,400 per year for 5 years. If both projects have a WACC of 14%, which project would you recommend?

Select the correct answer.

I. Both Projects S and L, since both projects have IRR's > 0.

II. Neither S or L, since each project's NPV

III. Both Projects S and L, since both projects have NPV's > 0.

IV. Project S, since the NPVS > NPVL.

V. Project L, since the NPVL > NPVS

4. Discounted payback

Project K costs $70,000, its expected cash inflows are $16,000 per year for 8 years, and its WACC is 13%. What is the project's discounted payback? Round your answer to two decimal places.

5. IRR

Project K costs $43,989.34, its expected cash inflows are $9,000 per year for 10 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.

6.

Capital budgeting criteria: mutually exclusive projects A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 1 3 4 5 Project A -$350 $55 $55 Project B -$550 $350 $350 Which project would you recommend? $55 $70 $195 $70 $195 $70 Select the correct answer. 1. Neither A or B, since each project's NPV 0. O III. Project B, since the NPVB > NPVA O IV. Both Projects A and B, since both projects have IRR's > 0. O V. Project A, since the NPVA> NPVB