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 0 1 2 3 4 5

Cash Flow -100,000 30,000 45,000 55,000 30,000 10,000

.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 0/ 1 /2 /3 /4 /5

cash flow -100,000 / 30,000 / 45,000 / 55,000 / 30,000 / 10,000

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 0/ 1/ 2/ 3/ 4/ 5

Cash flow -125,000 / 65,000 / 78,000 / 105,000 / 25,000

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 0 / 1 / 2 /3

Project A Cash flow -1,000 / 300 / 400 / 700

Project B Cash flow -500 / 200 / 400 / 300

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 0 / 1 /2 /3

Project A Cash Flow -20,000 / 10,000 / 30,000 / 1,000

Project B Cash Flow -30,000 / 10,000 / 20,000 / 50,000

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 0 / 1 /2 /3 /4 /5 / 6

Cash Flow -5000 / 1300 / 1400 / 1600 / 1600 / 1100 / 2000

11.Use the information below to:

A.Calculate the firms breakeven point in units?

B.Draw a breakeven chart for this firm.

FC = 20

P = 2

VC = .80