2. What is the internal rate of return on an investment with the following cash flows?

Year	Cash Flow
0	?$118,000
1	44,900
2	32,500
3	48,750

a. 11.88 percent

b. 3.36 percent

c. 31.18 percent

d. 35.64 percent

e. 10.39 percent

3.

What is the profitability index for an investment with the following cash flows given a 9 percent required return?

Year	Cash Flow
0	?$40,000
1	17,200
2	19,500
3	18,900

a. 1.17

b. .09

c. 0.85

d. 1.39

e. 0.72

5.

What is the payback period for the following set of cash flows?

Year	Cash Flow
0	?$ 3,300
1	2,300
2	1,800
3	2,600
4	2,700

rev: 09_18_2012

a. 1.56 years

b. 1.86 years

c. 1.63 years

d. 1.51 years

e. 1.58 years

6. What is the IRR of the following set of cash flows?

Year Cash Flow

0 ?$9,346

1 4,200

2 3,700

3 6,300

a. 22.79%

b. 23.46%

c. 21.22%

d. 21.89%

e. 22.34%

7. A firm evaluates all of its projects by using the NPV decision rule.

Year	Cash Flow
0	?$28,000
1	19,000
2	14,000
3	5,000

Required:
(a)	At a required return of 24 percent, what is the NPV for this project?
	(Click to select) -930.89 -968.88 -911.89 -949.88 -997.38

(b)	At a required return of 38 percent, what is the NPV for this project?
	(Click to select) -4,778.83 -4,977.95 -5,226.85 -5,077.51 -4,878.39

2. What is the internal rate of return on an investment with the following cash flows? Year 0 1 2 3 Cash Flow -$118,000 44,900 32,500 48,750 a. 11.88 percent b. 3.36 percent c. 31.18 percent d. 35.64 percent e. 10.39 percent 3. What is the profitability index for an investment with the following cash flows given a 9 percent required return? Year 0 1 2 3 a. b. c. d. e. Cash Flow -$40,000 17,200 19,500 18,900 1.17 .09 0.85 1.39 0.72 5. What is the payback period for the following set of cash flows? Year 0 1 2 3 4 Cash Flow $ 3,300 2,300 1,800 2,600 2,700 rev: 09_18_2012 a. b. c. d. e. 1.56 years 1.86 years 1.63 years 1.51 years 1.58 years 6. What is the IRR of the following set of cash flows? Year 0 1 2 3 Cash Flow -$9,346 4,200 3,700 6,300 a. 22.79% b. 23.46% c. 21.22% d. 21.89% e. 22.34% 7. A firm evaluates all of its projects by using the NPV decision rule. Year 0 1 2 3 Cash Flow -$28,000 19,000 14,000 5,000 Required: (a) At a required return of 24 percent, what is the NPV for this project? (Click to select) (b) At a required return of 38 percent, what is the NPV for this project? (Click to select) 2 0 1 2 3 $ $ $ $ (118,000) 44,900 32,500 48,750 3.36% 3 CF 0 1 2 3 PVIF-9% -40,000 17200 19500 18900 1 0.9174 0.8417 0.7722 PVCI PI 5 0 $ 3,300 1 2,300 2 1,800 3 2,600 4 2,700 PV -40000 15779.28 16413.15 14594.58 46787.01 -1.17 Cumulative cash flow -3300 -1000 800 3400 6100 PBP = 1+ (1000/1800) = 1.56 6 0 1 2 3 -9346 4,200 3,700 6,300 22.34% 7 a. CF 0 1 2 -28000 19000 14000 PVIF-24% PV 1 -28000 0.8065 15323.5 0.6504 9105.6 3 5000 0.5245 PVCI NPV 2622.5 27051.6 -948.40 b. CF 0 1 2 3 PVIF-38% PV -28000 1 -28000 19000 0.7246 13767.4 14000 0.5251 7351.4 5000 0.3805 1902.5 PVCI NPV 23021.3 -4978.70 2 0 1 2 3 $ $ $ $ (118,000) 44,900 32,500 48,750 3.36% 3 CF 0 1 2 3 PVIF-9% -40,000 17200 19500 18900 1 0.9174 0.8417 0.7722 PVCI PI 5 0 $ 3,300 1 2,300 2 1,800 3 2,600 4 2,700 PV -40000 15779.28 16413.15 14594.58 46787.01 -1.17 Cumulative cash flow -3300 -1000 800 3400 6100 PBP = 1+ (1000/1800) = 1.56 6 0 1 2 3 -9346 4,200 3,700 6,300 22.34% 7 a. CF 0 1 2 -28000 19000 14000 PVIF-24% PV 1 -28000 0.8065 15323.5 0.6504 9105.6 3 5000 0.5245 PVCI NPV 2622.5 27051.6 -948.40 b. CF 0 1 2 3 PVIF-38% PV -28000 1 -28000 19000 0.7246 13767.4 14000 0.5251 7351.4 5000 0.3805 1902.5 PVCI NPV 23021.3 -4978.70