1.The ____________________is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

2._________________________ is the difference between the present value of cash inflows and the present value of cash outflows over a period of time

3.The _________________ is a method of evaluating a project by measuring the time it will take torecover the initial investment.

Calculations: (PLEASE SHOW WORK)

4.Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and .25 years respectively.

Time Years0123456

Cash Flow-150,00030,00050,00045,000250003500010000

Use the payback decision rule to evaluate this project; should it be accepted or rejected?

5.Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively.

Time:012345

Cash Flow:-100,00030,00045,00055,00030,00010,000

Use the IRR decision rule to evaluate this project; should it be accepted or rejected? Calculate the IRR

6.Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively.

Time:012345

Cash Flow:-100,00030,00045,00055,00030,00010,000

Use the NPV decision rule to evaluate this project; should it be accepted or rejected?Calculate the NPV

7.Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years, respectively.

Time:012345

Cash Flow:-125,00065,00078,000105,000 105,00025,000

Use the NPV decision rule to evaluate this project; should it be accepted or rejected? Calculate the NPV

8.Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 10 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years, respectively.

Time:0123

Project A:-1,000300400700

Project B:-500200400300

Use the payback decision rule to evaluate these projects; which one(s) should be accepted or rejected?

9.Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively.

Time:0123

Project A:-20,00010,00030,0001,000

Project B:-30,00010,00020,00050,000

Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected?

10.Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half four and a half years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected?What is the payback period?

Time:012345 6

Cash Flow:-5,0001,3001,4001,6001,6001,1002,000